A Systematic Withdrawal Plan (SWP) is a facility offered by mutual fund houses that lets an investor withdraw a fixed amount at regular intervals (usually monthly) from an existing mutual fund corpus. The remaining corpus continues to be invested in the scheme.

How long will my SWP last?

The duration depends on the corpus size, the monthly withdrawal amount, and the rate of return generated by the underlying scheme. If the withdrawal rate is lower than the rate of return, the corpus can last indefinitely. If higher, the corpus will eventually deplete.

Each SWP withdrawal is treated as a partial redemption. The capital gains portion is taxed based on the fund type (equity or debt) and holding period. For equity funds, gains over ₹1.25 lakh per year on long-term holdings (over 12 months) are taxed at 12.5 percent.

SWP Calculator — Systematic Withdrawal Plan

Systematic Withdrawal Plan calculator

Inputs

Corpus (₹) Monthly withdrawal (₹) Expected return p.a. (%) Tenure (years)

Projected outcome

Total withdrawn

Sustainable Unsustainable at this rate

Computed month by month: each month, the remaining corpus earns % (one-twelfth of the annual rate), then ₹ is withdrawn. Excludes exit load, expense ratio, and taxes.

What is an SWP?

A Systematic Withdrawal Plan (SWP) is a facility offered by AMCs that lets an investor pull a fixed monthly amount from an existing mutual fund holding, by automatically redeeming the equivalent number of units at the prevailing NAV. The rest of the corpus stays invested and continues to grow.

SWPs are most useful for retirees converting an accumulated corpus into a regular income stream, but also for anyone who wants to draw a steady amount from a long-term investment without manually redeeming each month.

The 4% rule (and why it doesn't always work in India)

A widely-cited US guideline says you can safely withdraw 4% of a retirement corpus annually with high probability of the money lasting 30+ years, assuming a balanced portfolio. In India, the "safe withdrawal rate" is debated — Indian equity returns have historically been higher, but so have inflation and tax incidence on withdrawals. Many Indian advisers suggest a more conservative 3 to 4% real (inflation-adjusted) withdrawal rate. Use the calculator to test scenarios for your specific corpus and required income.

Taxes on SWP

Each monthly withdrawal is treated as a partial redemption. The capital gains portion of each withdrawal is taxable. The applicable rate depends on the fund type and holding period:

Equity funds — LTCG on units held over 12 months: 12.5% on gains exceeding ₹1.25 lakh per year. STCG: 20%.
Debt funds (post April 2023): gains taxed at slab rate regardless of holding period.

SWPs are commonly more tax-efficient than IDCW (dividend) payouts because only the capital-gains portion is taxed (not the entire withdrawal). Consult a tax adviser for your situation. See our disclosures.