What a withdrawal plan actually costs in tax, year by year
Why an SWP is not like interest. Each instalment is a partial redemption, so only the
gain inside it is taxable — the rest is the client's own capital coming back. Units go out oldest
first, which means one instalment can hold lots of different ages, some short-term and some long.
This works through that ledger month by month rather than applying a single rate.
The plan
Everything below is entered by you. Nothing is fetched from anywhere.
Months from the investment date. 1 means the very next month.
Assumed steady. Real NAVs do not move in a line.
Tax is worked out per financial year, April to March.
The fund
Pick the category. The tax treatment follows from it — you do not choose it separately.
Multi Asset is the only one that genuinely varies — some are structured to stay
equity-oriented, some are not. Check the scheme document if unsure.
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The client
This decides how much of the basic exemption is left over to absorb the gains.
Everything except this fund — salary, pension, rent, interest. Enter the taxable figure: for salary or pension, after the standard deduction (₹75,000 new regime, ₹50,000 old). This only sets which slab the gains fall into.
Only affects the old regime.
An NRI does not get the basic exemption set-off against these gains.
Compare with a fixed deposit
Useful when this is a proposal. Switch it off once the client has already decided.
Interest is taxed at slab every year, whether withdrawn or not.
What this is, and what it is not
This is an illustration of how the current rules would apply to the figures entered above. It is not
tax advice, and it is not a projection of returns.
The return is assumed steady. Real markets do not behave that way, and the tax split between
short and long term will move with them.
It assumes this is the client's only investment producing capital gains, so the ₹1.25 lakh
equity relief is applied here in full. If they hold other equity, some of it is already used.
Surcharge (income above ₹50 lakh) is not applied.
Rules used are those for FY 2025–26 and FY 2026–27. Please confirm against the current
Finance Act before relying on it, and ask the client to check with their tax adviser.
Mutual Fund investments are subject to market risks. Read all scheme related documents carefully.
