Exit load on a SIP redemption is charged instalment by instalment: each instalment's units start their own clock on the day they are allotted, and a redemption sells the oldest units first, so only units still inside the scheme's load period, a year in many equity schemes, pay it. Older instalments come out without the load, while recent ones can pay it and, in an equity fund, short-term tax as well if 12 months old or less. Prakash's ₹2,00,000 withdrawal below shows which of his 14 instalments pay and what waiting saves.

How is exit load charged on a SIP?

Exit load is a charge on redeemed units, and each scheme writes its own rate and window into its scheme information document. Since 1 April 2026, SEBI's Mutual Funds Regulations cap it at 3% of NAV for open-ended schemes, down from 5%.

In a mutual fund redemption, units go out first in, first out (FIFO), as the SIP guide explains for tax, and they are bought back at NAV less the load, so the load comes off what you receive.

The load does not go to the fund house: after GST, it is credited back to the scheme for the investors who stay. Nor is it a tax, but because it lowers the sale value, the gain is worked on the smaller amount. Units from bonuses or reinvested dividends carry none.

Which of Prakash's instalments pay exit load on ₹2,00,000?

Prakash earns ₹21 lakh CTC. His ₹25,000 SIP in an equity fund has run on the 5th of each month since 5 September 2025: 14 instalments, ₹3,50,000 in all, the last on 5 October 2026. A ₹2,00,000 booking deposit on a flat he is buying is due now, so he sells on 15 October 2026. His scheme charges 1% on units redeemed within a year.

The NAV path is an assumption made in October 2026, not a forecast: ₹100 at his first instalment, rising 1% a month, the SIP guide's 12% a year taken monthly, to ₹113.81. Selling ₹2,00,000 redeems 1,757.3 units, oldest first.

Only instalments 1 and 2 had crossed the 12-month mark by the sale date, in September and October 2026; the units he sells from instalments 3 to 7 and part of 8 are all younger.

Instalments sold Put in Value at ₹113.81 Exit load Gain after load Tax
1 and 2 (September, October 2025), over 12 months ₹50,000 ₹56,623 nil ₹6,623 nil: long-term, under the ₹1.25 lakh tax-free limit
3 to 7 and part of 8 (November 2025 to April 2026), 12 months or less ₹1,31,267 ₹1,43,377 ₹1,434 ₹10,676 ₹2,221: 20% plus 4% cess
Total ₹1,81,267 ₹2,00,000 ₹1,434 ₹17,299 ₹2,221

He receives ₹1,98,566, topping up the ₹1,434 from savings, and owes ₹2,221 of tax: the early exit costs ₹3,655, about 1.8% of the money. The long-term gain is tax-free only while his long-term equity gains for the year stay within ₹1,25,000. At FY 2026-27 rates the 20% applies at any salary, as does the load, with a surcharge only above ₹50 lakh of income. The mutual fund tax post covers the other fund types.

What does waiting for each instalment to cross 12 months save?

Each month another instalment turns a year old and sheds both the load and short-term tax. Holding the NAV at ₹113.81 and today's tax rules, so only the clocks change:

Sell after Instalments still under 12 months Exit load Short-term tax Total
15 October 2026 (now) 3 to 8 ₹1,434 ₹2,221 ₹3,655
6 November 2026 4 to 8 ₹1,155 ₹1,677 ₹2,832
5 December 2026 5 to 8 ₹879 ₹1,191 ₹2,070
5 January 2027 6 to 8 ₹605 ₹760 ₹1,365
5 February 2027 7 and 8 ₹335 ₹386 ₹721
5 March 2027 part of 8 ₹67 ₹66 ₹133
6 April 2027 none nil nil nil

A sale on the anniversary itself still counts as within the year; instalment 3 was allotted on 6 November 2025, the 5th being a market holiday, and instalment 8 on 6 April 2026, the 5th being a Sunday. Each full instalment that crosses saves about ₹590 to ₹820, and the whole wait of almost six months saves ₹3,655.

Is it worth waiting to avoid exit load when the money is due now?

Not for Prakash: his redemption charges, load and tax, are 1.8% of the money. If the NAV is 2% lower when he finally sells, the units he redeems are worth ₹4,000 less, more than the whole saving, and the deposit date does not move.

The ₹3,655 is the price of holding near-goal money in equity. The goal-based investing guide keeps money needed within three years in debt and puts equity behind goals seven or more years away. A liquid fund's exit load is nil from the seventh day, and its gains are taxed at Prakash's slab, 20% plus cess at ₹21 lakh CTC, the same rate as his short-term gain here; in the 30% slab they would be taxed more. If his SIP is in a regular plan, switching to direct has load and tax rules of its own.

Dhi ties the units kept for this year's flat deposit and a SIP running to 2040 to separate goals, so the two are never read as one pot. Dhi answers a question like whether to sell now or wait from your own numbers, and it earns no commission on any fund you sell or keep.

Frequently asked questions

No. Stopping or pausing a SIP only ends the future debits; there is no charge for it, and the units bought so far remain in the scheme. Exit load comes into play only if you later redeem units that are still inside the scheme's load period.
No. Each scheme chooses its own load and window: a 1% charge for a year is the usual equity-fund pattern in 2026, but some schemes stop charging sooner, some never charge, and a liquid fund's small graded load lasts only six days. Where a scheme does charge for a year, the year runs from each instalment's own allotment date, not from the day the SIP started, so a SIP begun 14 months ago can still pay load on its recent instalments.
Each scheme states its exit load and the period it applies for in its scheme information document and key information memorandum, and fund houses repeat it in their factsheets. A fund house can change it, but under SEBI's rules a new or higher load applies only to investments made after the change, so instalments already bought keep the terms they were bought under.

This is general information for salaried individuals in India, not personalised financial advice.