In 2025, charges associated with Systematic Investment Plans (SIPs) include an e-mandate fee, where some banks charge a one-time fee ranging from Rs 50 to Rs 236 for setting up automated payments. SIP returns are subject to capital gains tax, which varies based on fund type and holding period. Additionally, an exit load, typically 1% for equity funds, applies if investments are redeemed before a specified time, usually within a year.
Take a look at what these charges are:
Exit load
SIPs are a popular investment option mainly because they offer high liquidity, along with high returns. This means that you can withdraw from your SIP as and when you wish to. However, when you liquidate your SIPs, you need to pay a charge known as an exit load. This charge is a one-time fee and is expressed as a percentage of your total gains from the SIP. You only have to pay this charge if you exit the SIP prematurely. This means withdrawing from the SIP before the lapse of the holding period that the fund house has defined.
Transaction charges
This is another one-time fee that you need to pay if your investment in SIPs is over Rs. 10,000 at any given time. This charge amounts to Rs. 100 and is deducted in four consecutive instalments. You have to pay transaction charges along with your 2nd, 3rd, 4th and 5th instalments.
Expense ratio
Expense ratio in mutual funds is a measure of the total annual costs associated with managing and operating a mutual fund, expressed as a percentage of the fund's average assets under management (AUM). It includes various fees and expenses incurred in running the fund, such as management fees, administrative expenses, distribution fees (if any), and other operational costs. The expense ratio is deducted from the fund's returns before they are distributed to investors.
