How Can I Withdraw Money From a Mutual Fund SIP Investment?

Feb 23rd 2024
Mutual Fund
How To Withdraw SIP Amount Online: Steps For SIP Withdrawal in India

How Can I Withdraw SIP Amount Online, In recent times, mutual fund investment, especially through systematic investment plans (SIP), has emerged as a wonderful investment choice among people of different types and genres. The first and foremost reason behind the popularity of mutual fund investment, including SIP withdrawal, is higher returns and easy investment choices.

The simple liquidity that mutual funds, including the process of how to withdraw money from SIP, provide is one of their main benefits. Whether done online or through a physical application, redeeming mutual fund plans, including how you can withdraw SIP amount, is as easy as pressing a button. Withdrawing your mutual fund assets and following SIP withdrawal rules is simple, but there are a few things you should consider to make sure you obtain the most return on your investment.

Here, we'll go over how to redeem a mutual fund investment as well as several other crucial redemption-related topics.

Read More: Top 5 Small Cap SIP Funds to Consider in 2023

Different Ways to Withdraw Sip Amount

There can be different ways to withdraw funds from a mutual fund's SIP. A few of them are given below.

Making Use of a Distributor or Broker

You can use the services of your broker or distributor if you have invested in mutual funds through them to withdraw the amount from your SIP. Speak with your distributor or broker and provide them with the information they need, including your investment amount, scheme name, and folio number. They will walk you through the withdrawal procedure and provide you the necessary paperwork to complete. These documents usually contain investment and personal information so that the broker or distributor can handle the withdrawal quickly.

Straight from a Demat and Trading account

You can start the SIP withdrawal procedure right from your trading and DEMAT accounts if you have made mutual fund investments. Access your trading account and find the section where you can review your mutual fund holdings. Identify the particular SIP investment you wish to withdraw and adhere to the guidelines given by your trading platform. You may need to specify the withdrawal amount and provide any additional details as required. The trading platform will manage the withdrawal procedure and transfer the funds to your designated bank account.

Read More: What Is Large Cap Mutual Fund?

Through an Asset Management Firm

You can also get in touch with the asset management firm (AMC) that handled your investment directly to withdraw the amount from your SIP. For assistance with the withdrawal procedure, visit the AMC website or give them a call at their customer support number. Give AMC the information they need to find your investment and start the withdrawal, such as your folio number and scheme name. You will be asked to fill out a withdrawal form by the AMC, which is usually available online or in person. Provide the required details on the form and indicate the SIP amount you would like to withdraw.

Seeking help from the Registrar and Transfer Agents (RTAs)

Registrars and Transfer Agents (RTAs) are the people who conduct administrative duties, such as withdrawals, for mutual funds. Should you want assistance with the withdrawal procedure, get in touch with RTA linked to your mutual fund investment. Find RTA's contact details on the mutual fund's website or by getting in touch with customer care. For assistance with the withdrawal process, get in touch with the RTA by calling their hotline or stopping by their office. To enable them to correctly identify your investment, provide them with information about it, such as your folio number and scheme name. RTA will walk you through the process and give you any paperwork you need to withdraw.

Things to Keep in Mind While Withdrawing Funds from a Mutual Fund SIP

If you are looking to withdraw funds from a SIP scheme you have invested in, make sure to take a look at the following aspects that can help you make the right decision down the line.

  1. Tax Implications

The Income Tax Act in India contains unique rules about how receipts from investment withdrawals are handled. For example, profits from equity-oriented mutual funds are subject to 15% short-term capital gains tax if you withdraw your investments within a year of purchase. The tax rate is 10% on long-term gains over one lakh rupees. When it comes to debt funds, long-term profits are subject to 20% tax, while short-term gains are added to your yearly income and subject to the corresponding income tax slab rate. Mutual fund plans can include a lock-in term as well. This implies that any gains may be subject to an increased tax rate, but you might not be able to withdraw the investment during this time.

Therefore, it is advisable to speak with a tax professional before requesting any withdrawals from mutual fund schemes. This is due to the fact that tax consultants can assist in taking the proper actions to save money on taxes and assure larger net earnings.

     2. Exit Load

You've probably heard of entrance loads and exit loads when buying mutual fund schemes. When you buy or "enter" a mutual fund or when you sell or "exit" a mutual fund, the mutual fund will impose transaction fees.

Typically, exit loads are assessed when mutual funds are redeemed before the designated time. Therefore, in the event that you apply for a withdrawal early, you should carefully analyse these exit loads, which are typically 1%, to make sure that the fund managers' fees do not ultimately lower your net earnings.

     3. Processing time and lock-in duration

As previously stated, there are a number of requirements for mutual fund investments that must be met in order for a withdrawal to be approved. Several factors include relevant tax rates, lock-in durations, and associated transaction expenses. The lock-in period for closed-ended mutual funds typically lasts anywhere from a few months to three to five years. With the exception of ELSS securities, open-ended mutual funds are reasonably liquid.

After the mutual fund scheme's lock-in period has ended, you are free to leave at any moment. If you would like to withdraw money earlier, you can do so after paying the relevant penalty. 

FAQs

1. Can I Withdraw Funds From My Mutual Funds Investment Scheme At Any Time?

One can request for redemption that can be made on any working day. Investors are always free to sell all or a portion of their investment. Typically, redemption occurs after an investment achieves their aim or target. 

2. When The Sell Order is Placed, How Long Does It Take to Get The Money?

The AMC normally transfers funds to your account within three to four business days of receiving your redemption request.

3. When Should I Redeem My Mutual Funds?

Units in mutual funds may be redeemed in accordance with personal investing preferences and financial objectives. Before making a decision, investors should carefully analyse their withdrawal options as they can have a direct influence on their ability to make larger gains.

The Conclusion

Before arriving at a decision, mutual fund withdrawal should be thoroughly explored. Remaining invested is a prudent course of action if you do not have a clear cause to redeem your assets. Sometimes, the volatility of the market might be frightening. To profit in the long run, an investor should, nonetheless, constantly exercise patience under such circumstances and think about holding onto their investment.

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