What is an SWP?
A Systematic Withdrawal Plan sells a fixed amount of your mutual fund units every month and pays it to your bank account. What stays invested keeps earning, so a corpus can pay you for far longer than it would sitting in a savings account. Many people use an SWP for income in retirement, after returning to India, or to replace a salary during a break.
How this calculator works
Each month your money grows by the return you enter, turned into a monthly rate, and then that month’s withdrawal is paid out. Every 12 months the withdrawal rises by the percentage you choose. If the money cannot pay a full month, it has run out. The highest safe withdrawal is the largest starting amount that still pays in full for every month of your plan.
Why SWP tax is usually low
Each withdrawal is part your own money and part profit. Only the profit part is taxed. If you invest ₹1 crore today, your first withdrawals are almost all your own money, so there is very little to tax. With equity funds, profit on units held over a year is also tax-free up to ₹1.25 lakh a year, which covers most of a typical SWP. This calculator works out the profit share of every withdrawal and taxes only that.
How much can I safely withdraw?
It depends on how long the money must last and what it earns. A common rule is to start at 4 to 5% of the corpus a year and raise it with prices. Withdrawing more than your money earns makes the balance fall from the first month. The table shows each year so you can see when that starts to bite.
Frequently asked questions
Is SWP better than an FD for monthly income?
An FD’s interest is fully taxed at your slab rate every year. In an SWP only the profit part of each withdrawal is taxed, and equity profits get a ₹1.25 lakh yearly exemption, so more of the money reaches you. But fund values go up and down, while an FD’s value does not.
What happens if markets fall during my SWP?
Your withdrawals continue, so more units are sold at lower prices and the money runs out sooner. Keeping a year or two of withdrawals in a debt fund, and drawing from it when markets are down, reduces this risk. This calculator uses a steady return, so treat the result as a guide, not a promise.
Is TDS deducted on SWP for residents?
No TDS is deducted on capital gains from mutual funds for resident Indians. You pay the tax yourself when you file your return. NRIs have tax deducted by the fund house.
Should I start the SWP straight after investing?
Units sold within a year of buying count as short-term, taxed at 20% for equity funds. Many people keep the first year’s income in a debt fund or bank account and start the equity SWP after twelve months.
Does this include exit loads and fund charges?
No. Enter a return after fund expenses. Most funds charge no exit load after the first year.