I have accumulated Rs 10 lakh via SIP. Should I go for a systematic withdrawal program now and what will be the tax implication?
—Deepak Singh
Ideally, withdrawals really should be require-based – i.e. really should be accomplished to meet any planned / un-planned expenditures. Any withdrawal would reduced your portfolio worth to the extent of the quantity withdrawn, and you might also drop out on any subsequent gains on the withdrawn corpus that would have accrued till the finish of your investment horizon.
Investors really should stick to their extended-term strategic asset-allocation which in turn depends on their danger appetite and not attempt and time the markets. You can take into consideration re-balancing your asset-allocation back to your encouraged extended-term asset allocation in case of any important drift due to the current sharp uptick in equity markets.
Withdrawals through the systematic withdrawal program (SWP) route are basically treated as redemptions. The redeemed proceeds are topic to capital gains tax. For equity-oriented funds, capital gains in case of holding periods up to one year are termed as quick-term gains and taxed at 15% excluding cess and surcharge. Capital gains in case of holding periods more than one year are termed as extended-term gains and taxed at 10% on gains in excess of Rs 1 lakh per annum. For debt and foreign funds, capital gains in case of holding periods up to 3 years are termed as quick-term gains and taxed at the marginal price of revenue. Capital gains in case of holding periods more than 3 years are termed as extended-term gains and taxed at 20% with indexation.
Is it mandatory to do a KYC once more to open a further SIP with a distinct mutual fund enterprise?
—Anshuman Tiwari
No, a know your consumer (KYC) compliant person is not expected to go via the KYC approach once more when beginning SIP with distinct mutual fund homes. Once KYC is accomplished via a Sebi registered intermediary, you require not undergo the identical approach once more when you strategy a further intermediary. All mutual funds have facilitated a centralised platform via CVL, NDML, DotEx, CAMS & KARVY to carry out the KYC process on their behalf. Once registered with them, you can invest in any mutual fund.
The writer is director, Investment Advisory, Morningstar Investment Adviser (India). Send your queries to