How to Withdraw SIP Amount from Mutual Funds?

This article aims to help individuals understand the process of withdrawing their Systematic Investment Plan (SIP) money, a systematic strategy commonly used in mutual funds. SIPs allow individuals to invest a specific amount into a chosen mutual fund scheme on a regular basis, usually on a monthly or quarterly basis. It provides a comprehensive guide on how to withdraw SIP amount, which helps in taking control of the financial journey and access the assets immediately or prepare for significant milestones.
 

What does Redemption from Mutual Funds Mean?

The process of selling your investments is called withdrawal. Redeeming is the term for this procedure in mutual funds. In a mutual fund system, you are effectively redeeming units when you take money out. You realise the value of the units you possess when you sell them at the relevant Net Asset Value (NAV).

Consider the following scenario: you have invested in 1,000 units of a mutual fund scheme. You can withdraw a certain sum in currency terms or redeem or sell a specific number of units. Redeeming 500 units from your mutual fund holding would be necessary if you wanted to withdraw Rs. 5,000 assuming that each unit is worth Rs. 1. In a similar vein, you have the option to take money out of your mutual fund portfolio in the amount of 10 or 900 units that you redeem.
 

The process of selling your investments is called withdrawal, and in mutual funds, this is known as redemption. When you withdraw or redeem your SIP mutual fund amount, you’re essentially selling units at the current Net Asset Value (NAV). For example, if you hold 1,000 units and want to withdraw Rs. 5,000, you would redeem 500 units at Rs. 1 each. You can choose partial withdrawal from a mutual fund SIP or redeem all units for a full SIP withdrawal.

Table of Contents

1. What does Redemption from Mutual Funds Mean?
2. Types of Mutual Fund Redemptions
3. Methods to Withdraw SIPs
4. SIP Withdrawal Process – Step by Step
5. Things to Keep in Mind While Withdrawing SIP Amount Online

Types of Mutual Fund Redemptions

• Partial Withdrawal
  You can withdraw a portion of your SIP investment while keeping the rest intact. For example, redeeming Rs. 50,000 worth of units from a Rs. 1 lakh portfolio.
   
• Full Withdrawal
  This is when you redeem all units in your mutual fund folio, close the scheme, and withdraw the entire amount including gains.

Methods to Withdraw SIPs

• Using a Broker or Distributor
  If you invested through a broker, they can guide you through the SIP withdrawal process step by step, collecting details like your investment amount, scheme name, and folio number.
   
• Directly from a Trading and Demat Account
  Log in, select your SIP holding, and follow the how to withdraw money from SIP mutual fund process. Enter the amount, choose withdrawal options, and the funds will be credited to your bank.
   
• Through an Asset Management Company (AMC)
  Visit the AMC’s website or branch, fill out a SIP redemption form with the scheme name, folio number, and withdrawal amount, and submit it for processing.
   
• Through Registrar and Transfer Agents (RTAs)
  Contact RTAs for help with SIP withdrawal rules in India. Provide your folio number and scheme name, and they will guide you through the process.

SIP Withdrawal Process – Step by Step

Below are the steps to withdrawal SIP:

• Step 1: Log in to your account via your broker, AMC, or mutual fund app.
• Step 2: Go to the redemption or withdrawal section.
• Step 3: Enter the withdrawal details and select the bank account.
• Step 4: Choose your withdrawal method – direct bank transfer, cheque, or online transfer.
• Step 5: Confirm and submit your request.
• Step 6: Monitor your bank account for the credited amount.

Things to Keep in Mind While Withdrawing SIP Amount Online

• Tax Implications: Short-term and long-term capital gains tax applies depending on the fund type and holding period. Equity mutual funds have a 15% short-term tax, while debt funds have a 20% rate.
• Exit Load: Some schemes charge up to 1% if you withdraw before a set period.
• Processing Time & Lock-in Period:  Processing usually takes 3–5 working days for open-ended schemes. ELSS and closed-ended funds have a lock-in period during which withdrawals aren’t allowed.
   

Conclusion
Knowing how to redeem SIP amount online or offline is key to managing your investments. Whether you opt for partial withdrawal from a mutual fund SIP or a full exit, ensure you understand tax rules, exit loads, and lock-in periods. A reliable investing platform can make the process smoother and faster.