How To Withdraw SIP Amount

Introduction

Know how to withdraw my SIP amount and unlock the potential of your investments with ease. Whether you're planning for a major milestone or need immediate access to your funds, understanding the ins and outs of SIP withdrawals is essential. SIP or Systematic Investment Plan is a disciplined approach that is commonly used in mutual funds. 

It allows individuals to invest a fixed amount of money at regular intervals, typically monthly or quarterly, in a selected mutual fund scheme. In this comprehensive guide, we will guide you through everything there is to know about the question you might ask yourself, how can I withdraw my SIP amount while taking control of your financial journey? 

How to Withdraw SIP Amount Process? 

The process of how to withdraw SIP amount is easy and hassle-free, and in order to do the same, you can refer to the following steps: 

Utilizing a Broker or Distributor

If you have invested in mutual funds through a broker or distributor, you can utilize their services to withdraw your SIP amount. Reach out to your broker or distributor and provide them with necessary details such as your folio number, scheme name, and investment amount. They will guide you through the withdrawal process and provide you with the required forms to fill out. These forms typically include personal information and investment details, enabling the broker or distributor to process the withdrawal efficiently.

Directly Using Your Trading & DEMAT Accounts

If you have invested in mutual funds through your trading and DEMAT accounts, you can initiate the withdrawal process directly from these accounts. Log in to your trading account and locate the section where you can view your mutual fund holdings. Identify the specific SIP investment you want to withdraw and follow the instructions provided by your trading platform. You will likely need to specify the withdrawal amount and provide any additional details requested. The trading platform will facilitate the withdrawal process and transfer the funds to your designated bank account.

Using the Asset Management Company

To withdraw your SIP amount, you can also directly contact the asset management company (AMC) through which you have made your investments. Visit AMC's website or contact their customer service helpline to seek guidance on the withdrawal process. Provide AMC with your investment details, including your folio number and scheme name, to help them locate your investment and initiate the withdrawal. The AMC may require you to complete a withdrawal form, which can typically be found on their website or obtained from their office. Fill out the form with the necessary information and specify the amount you wish to withdraw.

The Assistance of Registrar and Transfer Agents 

Mutual funds often have Registrar and Transfer Agents (RTAs) that handle administrative tasks, including withdrawals. You can contact the RTA associated with your mutual fund investment for assistance with the withdrawal process. Obtain the contact information of the RTA either from the mutual fund's website or by contacting their customer service. Reach out to the RTA through their helpline or visit their office to seek guidance on the withdrawal procedure. Provide them with your investment details, such as your folio number and scheme name, to help them identify your investment accurately. The RTA will guide you through the necessary steps and provide any required forms for withdrawal.

How Do You Withdraw Money from Mutual Funds Online?

Apart from the methods mentioned above, if you wish to answer the question of how to withdraw the SIP amount online, you can refer to the following steps: 

-    Visit the official website of the mutual fund and click on ‘Online Transactions.’
-    Add in your Permanent Account Number and folio number to log into your access and access the mutual fund 
-    After you have logged in, select the plan and the unit numbers you wish to redeem 
-    The last step is the confirmation of your transaction. 

Factors to Consider While Submitting a Mutual Fund Redemption Request 

Although submitting your redemption request is a crucial point, it is important that you keep a few key considerations in your mind. These factors play a significant role in determining the timing and implications of your redemption decision. By carefully evaluating these factors, you can make a more informed choice that aligns with your investment objectives and financial goals. Some key considerations are discussed below. Taking these factors into account ensures that you make a well-informed decision when submitting a mutual fund redemption request. Read on to find out more. 

The Type of Fund 

The ability to redeem your funds at a specific period mainly depends on the type of fund you have invested in. For example, redemption is only possible for close-ended products such as ELSS or fixed maturity funds once the lock-in period has expired. The availability of redemption varies among different mutual fund categories, and understanding the specific terms and conditions associated with your investment is essential to determine when you can redeem your funds.

The Lock-in Duration 

Certain types of Mutual Funds have specific lock-in periods that investors must be aware of. For instance, ELSS (Equity Linked Savings Scheme) funds typically have a lock-in period of 3 years. Similarly, solution-oriented programs may have a lock-in period of 5 years or until the participant reaches retirement age or the age of majority.

During the lock-in period, investors are restricted from liquidating or redeeming their investments. Investors need to consider the expiration of the lock-in period when contemplating Mutual Fund redemption. Understanding the specific lock-in period associated with your investment is crucial for making informed decisions regarding the redemption of your Mutual Fund units.

The Exit Load 

Certain Mutual Fund schemes impose an exit load on investors if they redeem their units before a specified duration. The exit load is typically calculated based on the Net Asset Value (NAV) at the time of redemption and directly affects the overall portfolio returns. To protect your portfolio's returns, consider delaying the redemption request until the exit load period has concluded. By doing so, you can avoid the burden of exit load charges and maximize your investment returns.

The Holding Period of the Mutual Funds

Mutual Fund investments are subject to different tax rates for Short-Term Capital Gains (STCG) and Long-Term Capital Gains (LTCG). LTCG tax rates are generally lower than STCG rates as they aim to incentivize taxpayers to hold their investments for the long term. The gains from Mutual Fund units are categorized as either LTCG or STCG based on the holding period. It is important to handle redemption requests carefully, especially if they can be postponed until the gains qualify as long-term. In such cases, it is advisable to delay the redemption to benefit from potential tax savings. These tax savings can have a positive impact on the overall portfolio returns.

Conclusion 

In times of need or emergency, mutual fund holdings can be a great source of funds. It not only offers flexibility in terms of withdrawal but gives you quick access to cash. However, before making a redemption request, it is highly necessary to review the withdrawal process thoroughly and whether it should be carried out online or offline.  

FAQs

Q1. How long does it take to withdraw money from SIP?

After you have submitted the withdrawal request, it may take up to a minimum of 2 days to reflect any action. However, if two days pass without any withdrawal amount in your account, you can directly contact the bank. 

Q2. Is SIP withdrawal taxable? 

Mutual fund returns, including SIP and lump sum investments, are subject to taxes upon redemption. The taxation depends on whether the gains are classified as short-term capital gains (STCG) or long-term capital gains (LTCG). STCG is taxed at your income tax slab rate, while LTCG has specific tax rates and exemptions based on the type of mutual fund.

Q3. Can I withdraw my SIP after 1 year?

Yes, you can withdraw your SIP after one year. It will be considered a long-term capital gain, and the taxes implied on it will be lower. 

Q4. Can I withdraw my SIP after 3 years?

Yes, you can withdraw your SIP after a period of three years when the lock-in period ends. You can either raise an online request or log into the mutual fund's website and raise a redemption request. 
Q5. Can I withdraw my SIP anytime? 
Yes, you can withdraw money from your SIP anytime. However, there are a few exceptions. For instance, ELSS has a lock-in period of three years, while a children's savings fund exhibits a lock-in period of 5 years.