SWP Tax Calculator
Work out what a systematic withdrawal plan actually costs in tax, and how much of each withdrawal is your own capital coming back rather than taxable gain.
What the SWP tax calculator does
An SWP tax calculator shows the tax on a systematic withdrawal plan. Each withdrawal is a redemption, so only the gain inside it is taxable — the rest is your own capital returning. That is why an SWP is usually taxed far more lightly than a fixed deposit paying the same amount.
Your inputs
Invested once. A corpus built by a SIP has units of many ages, which shifts when the short-term period ends.
An assumption you are making, not a rate anyone is offering
Kind of fund
At least 65% in Indian equity. Includes aggressive hybrid and arbitrage funds.
Your income tax slab
Used only for the deposit comparison below — equity gains do not depend on your slab.
Of the ₹1,20,00,000 you withdraw, the taxable part is
₹66,19,199
The other ₹53,80,801 is your own capital coming back, which is not taxed again. A withdrawal is a redemption, not income — only the gain inside it counts.
- Tax across the whole plan
- ₹5,38,349
- As a share of what you withdrew
- 4.49%
- Still invested at the end
- ₹3,10,75,663
At these assumptions growth outpaces the withdrawals, so the corpus ends larger than it started. The question stops being how long it lasts and becomes how much is left behind.
Illustration only, computed from the assumptions shown — not a forecast, a projection of any scheme's performance, or a guarantee. Mutual fund investments are subject to market risks; read all scheme related documents carefully.
₹5,086 of that tax is the first twelve months
Units sold before they are a year old produce short-term gains, taxed at 20% with no annual exemption to shelter them. Every withdrawal after the twelve-month mark is long-term instead, at 12.5% and after the ₹1,25,000 exemption. Starting the withdrawals once the units are a year old moves that whole first year into the cheaper bracket.
Illustration only, computed from the assumptions shown — not a forecast, a projection of any scheme's performance, or a guarantee. Mutual fund investments are subject to market risks; read all scheme related documents carefully.
The same money in a fixed deposit
Same corpus, same monthly payout, same assumed return — so the only thing that differs is how the two are taxed. Both columns assume everything is finally cashed out and taxed, so they mean the same thing.
| Fixed deposit at 30% slab | Equity fund SWP | |
|---|---|---|
| Withdrawn over the plan | ₹1,20,00,000 | ₹1,20,00,000 |
| Left at the end | ₹3,10,75,663 | ₹3,10,75,663 |
| Growth over the plan | ₹3,30,75,663 | ₹3,30,75,663 |
| Taxed at | 30%, as the interest accrues | 12.5% when units are sold, after ₹1,25,000 a year |
| Tax on the withdrawals | ₹99,22,699 | ₹5,38,349 |
| Tax on cashing out what is left | already paid | ₹33,07,058 |
| Left in your hand | ₹3,31,52,964 | ₹3,92,30,256 |
The fund keeps ₹60,77,292 more. Not because it earns more, and not because less of it is taxed — both grow by ₹3,30,75,663 and, once everything is cashed out, all of that is taxable either way. The difference is the rate and the timing: 12.5% against your 30% slab, an exemption of ₹1,25,000 in every year you withdraw, and tax falling due only when units are sold rather than as interest accrues. Note the row above: the fund’s remaining units still owe ₹33,07,058, counted here rather than quietly left out.
The deposit is assumed to earn the same return as the fund, which it would not in practice — that isolates the tax treatment and is not a claim that the two perform alike. Illustration only, computed from the assumptions shown — not a forecast, a projection of any scheme's performance, or a guarantee. Mutual fund investments are subject to market risks; read all scheme related documents carefully.
Year by year
The withdrawal does not change, but the taxable share of it climbs every year. Early on you are mostly getting your own money back; later, the units being sold carry far more gain and far less cost.
| Year | Withdrawn | Your capital | Taxable gain | Taxable share | Tax |
|---|---|---|---|---|---|
| 1short-term | ₹6L | ₹5.75L | ₹25.43K | 4.24% | ₹5,086 |
| 2 | ₹6L | ₹5.22L | ₹77.66K | 12.94% | — |
| 3 | ₹6L | ₹4.75L | ₹1.25L | 20.86% | ₹19 |
| 4 | ₹6L | ₹4.32L | ₹1.68L | 28.05% | ₹5,415 |
| 5 | ₹6L | ₹3.92L | ₹2.08L | 34.59% | ₹10,320 |
| 6 | ₹6L | ₹3.57L | ₹2.43L | 40.54% | ₹14,780 |
| 7 | ₹6L | ₹3.24L | ₹2.76L | 45.95% | ₹18,834 |
| 8 | ₹6L | ₹2.95L | ₹3.05L | 50.86% | ₹22,519 |
| 9 | ₹6L | ₹2.68L | ₹3.32L | 55.33% | ₹25,870 |
| 10 | ₹6L | ₹2.44L | ₹3.56L | 59.39% | ₹28,916 |
| 11 | ₹6L | ₹2.22L | ₹3.78L | 63.08% | ₹31,685 |
| 12 | ₹6L | ₹2.01L | ₹3.99L | 66.44% | ₹34,202 |
| 13 | ₹6L | ₹1.83L | ₹4.17L | 69.49% | ₹36,491 |
| 14 | ₹6L | ₹1.66L | ₹4.34L | 72.26% | ₹38,571 |
| 15 | ₹6L | ₹1.51L | ₹4.49L | 74.78% | ₹40,462 |
| 16 | ₹6L | ₹1.38L | ₹4.62L | 77.08% | ₹42,182 |
| 17 | ₹6L | ₹1.25L | ₹4.75L | 79.16% | ₹43,745 |
| 18 | ₹6L | ₹1.14L | ₹4.86L | 81.05% | ₹45,166 |
| 19 | ₹6L | ₹1.03L | ₹4.97L | 82.78% | ₹46,457 |
| 20 | ₹6L | ₹93.95K | ₹5.06L | 84.34% | ₹47,632 |
The years showing no tax are the ones the ₹1,25,000 annual exemption covered entirely. That is what lets a modestly sized withdrawal plan run for years without a bill — and it resets every 1 April, so spreading withdrawals across years is what makes it work.
Illustration only, computed from the assumptions shown — not a forecast, a projection of any scheme's performance, or a guarantee. Mutual fund investments are subject to market risks; read all scheme related documents carefully.
What this assumes
- The corpus was invested in one go. A corpus built up by a SIP holds units of many different ages, and withdrawals retire them oldest first — so the short-term period ends at a different point and some units are long-term from the start.
- Returns arrive in a straight line. They do not. In a falling market the same withdrawal sells more units, the corpus drains faster, and no smooth projection shows that.
- Nothing else uses the exemption. It is one allowance per person per year across every equity fund and listed share you hold, so any other gain you realise reduces the room these figures assume.
- Surcharge and cess are excluded, and so is any exit load your scheme charges on early redemptions. There is no tax deducted at source on a resident’s mutual fund redemption, so the tax above is paid through advance tax or on filing.
No returns are assured or guaranteed. Any illustration of returns is a mathematical projection, not a promise. GrowIQ Capital is a mutual fund distributor and does not provide tax advice. This is arithmetic on the figures you entered, for discussion with a qualified tax adviser.
How the SWP tax calculation works
Taxable gain = withdrawal − (units sold × their original cost)
Each withdrawal sells units at that month's NAV, and only the difference between what they fetch and what they cost is taxable — the rest is your own capital returning. Units are retired oldest first, so redemptions in the first twelve months are short-term and everything after is long-term, with the annual exemption applied to each financial year in turn. The withdrawal schedule and the month the corpus runs out match the SWP calculator exactly.
Frequently asked questions
Is the whole SWP withdrawal taxable?
No. A withdrawal is a redemption of units, not income. Only the capital gain within it is taxable; the balance is your own capital coming back, which has already been taxed. If you withdraw ₹50,000 from units that cost ₹35,000, the taxable amount is ₹15,000.
Why does the taxable part of my SWP grow each year?
As the NAV rises, the units sold to fund the same withdrawal carry proportionally more gain and less cost. Early withdrawals are mostly return of capital; later ones are mostly gain. The rupee amount you receive does not change, but the taxable share of it climbs.
Should I wait before starting an SWP?
Units redeemed before they are twelve months old produce short-term capital gains, taxed at a higher rate with no annual exemption. Starting withdrawals immediately spends the first year in that bracket. Waiting until the units are a year old moves those gains into the long-term bracket instead.
Is an SWP better than a fixed deposit for regular income?
On tax, usually yes for an equity fund: only the gain portion of each withdrawal is taxable and long-term gains have an annual exemption, whereas the entire interest on a deposit is taxed at your slab rate. A debt fund bought after 1 April 2023 is taxed at slab rates too, so once everything is finally redeemed it offers deferral rather than a lower bill.
How is SWP taxed from a debt fund?
Units in a debt fund bought on or after 1 April 2023 are taxed at your income tax slab rate however long they are held, under section 50AA. There is no long-term treatment and no annual exemption, so only the gain-versus-capital split works in your favour.
Does an SWP have TDS?
For a resident investor there is no tax deducted at source on mutual fund redemptions, so the tax is paid through advance tax or at the time of filing. Interest on a fixed deposit, by contrast, has TDS deducted as it is credited.
GrowIQ Capital provides financial data analytics, market information and educational content. We are not a SEBI-registered Investment Adviser or Research Analyst. Nothing on this platform constitutes investment advice or a recommendation to buy or sell any security. No returns are assured or guaranteed. Any illustration of returns is a mathematical projection, not a promise. Past performance is not indicative of future returns and does not guarantee future results.