Systematic withdrawal plans or SWPs are subject to tax and it depends on the type of funds you are withdrawing from
29-Sep-2022
If I opt for an SWP from a fund where I have units purchased during various times and different high/low prices, how can I calculate the capital gains? - Mohan Gangaramani
What is an SWP?
A systematic withdrawal plan (SWP) is a method whereby investors redeem their money either from equity funds or debt funds, depending on their investment needs. SWPs allow redemption of mutual fund units in a staggered manner which, in turn, averages the price at which one exits the market.
Tax implications in SWPs
In mutual funds, any redemptions through SWPs are subject to taxation. SWP redemption is as per the first-in-first-out (FIFO) method wherein units bought first are assumed to be redeemed first. However, there are different tax structures for debt funds and equity funds.
However, to make the tax calculation easy, you can check the capital gains tax liability on unrealised gains on your investment platform. You do not need to do much work as the process is automated and generally offered by the platform through which you are investing.
Alternatively, you can go to 'My Investments' on Value Research Online, upload your investments (which is automatic and hassle-free) and get your tax report.
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