SWP — draw income from mutual funds, tax-efficiently

✍️ EaseValue Advisors · Updated 17 Jul 2026 · FY 2025-26

In short

Need regular income? A Systematic Withdrawal Plan (SWP) from a mutual fund is far more tax-efficient than interest or dividends — because only the capital-gain portion of each withdrawal is taxed, not the whole amount.

Why it's efficient

Each SWP withdrawal redeems some units — part is your own capital (not taxed) and part is gain (taxed). Compare that with a fixed deposit, where the entire interest is taxed at your slab.

Extra breaks

Equity funds: the first ₹1.25 lakh of long-term gains each year is tax-free, then 12.5%.
Hold units > 12/24 months so the gain is long-term.

Ideal for retirees wanting a monthly payout with minimal tax.

The law behind it

Section 45 Section 112A

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General information for FY 2025-26 (AY 2026-27), not advice on your specific case. Limits, rates and conditions change with each Finance Act and depend on your facts — confirm before acting. © EaseValue Advisors LLP.

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