WHAT IS SWP
Systematic Withdrawal Plan (SWP)
Market conditions can not be predicted. Although the Rupee Cost Averaging works in a great way over the market cycles and in the long run, it can not ensure profits in the medium or short run nor can it protect from making a loss in declining markets.
That is why KAUTILYA recommends SWP. Systematic Withdrawal Plan means regular redemptions from a fund that has been held for a good amount of time and has built a good corpus.
Investors can either redeem a fixed amount, a fixed number of units or all returns above a certain base level. If you are looking for a regular income, SWP is for you.
HOW ARE MUTUAL FUNDS TAXED?
Talking of redemption, let’s check out how mutual funds are taxed.
Profits from Mutual funds are not taken under the head income. But are treated separately under Capital gains and taxed accordingly. There are two kinds of Capital Gains.