What is SWP and how SWP Calculator can help?

[Kanika Shelatkar]

Systematic withdrawal plan or SWP is a utility in mutual funds India through which you can draw a fixed amount from your mutual funds at a specified frequency, it could be monthly, quarterly or annual. In a SWP, you can select a date in a month when the withdrawal should be made and the predetermined amount will get credited to your bank on the specified day. You can continue the withdrawal till such time you have balance units in your mutual fund scheme account.

How does SWP work?
SWP provides you the amount by redeeming units from your mutual fund investments. The number of units so redeemed for each SWP payout depends on the SWP amount and the prevailing NAV on the date when the SWP payment is made.

SWP in Mutual Funds India offers variety of advantages to its users such as investment discipline, flexibility, convenience, systematic profit booking, etc. Additionally, it has tax benefits as there is no tax deduction happening at source in case of SWP. However, capital gains tax is applicable as per the frequency and amount of the withdrawal from mutual funds India.

SWP CALCULATOR
It is difficult to make accurate calculations regarding monthly withdrawals, matured sum, units left, etc. In order to make it easy for the investor, the SWP calculator is used. It is an online tool that can compute within seconds, your matured sum in mutual funds, after the withdrawals made by you, through SWP. Systematic withdrawal plan calculator is simplifying the way in which people invest in mutual funds India.

In order to use the SWP calculator, you need to first select the scheme that you have invested in and wish to withdraw from. Then, enter the initial investment amount, withdrawal amount, SWP period i.e. the tenure for which you want your SWP instalments to go on. Post entering all the required values, press calculate. The SWP Calculator will tell you how many SWP instalments you can draw from your investment, total withdrawal amount, value of your investment at the end of the SWP period and the annualized returns of the SWP.

Taxation of SWP
SWP withdrawals will be subject to capital gains taxation. Capital gains made in SWP withdrawals from equity oriented funds within 1 year from date of investment will be taxed at 15%. Capital gains made after 1 year from date of investment will be tax exempt up to Rs 100,000 in a financial year and taxed at 10% thereafter.

Capital gains made in SWP withdrawals from debt oriented mutual funds within 3 year from date of investment will be taxed as per the income tax rate of the investor. Capital gains made in SWP withdrawals from debt funds after 3 years from date of investment will be taxed at 20% after allowing for indexation benefits.

Hence, it is understood that SIP, SWP, STP or other ways of mutual fund India investments options can be simplified for investors with the help of online tools, and the SWP Calculator is one of them. It is an easy tool that can help one make more informed decisions when they decide to arrange for regular cash flows from their SIP investments after a period of time, through SWP.