Summary
You can close an SIP through your investment platform, the AMC website, or by submitting a bank mandate cancellation.
Closing an SIP stops future instalments, while your existing mutual fund units continue to stay invested.
Cancel your SIP only after reviewing your financial goals and completing the cancellation process correctly.
How to Close SIP in India?
You can close an SIP or Systematic Investment Plan SIP in India, by submitting a cancellation request through the platform you used to start the SIP. Through the asset management company website, or by cancelling the bank auto-debit mandate linked to your SIP.
But before that it is important to understand that closing an SIP is different from redeeming an SIP.
When you close or cancel an SIP only the future monthly investments/instalments are stopped. You hold mutual fund units that you bought and these stay in your account until you sell them.
On the other hand, redeeming an SIP means you sell the mutual fund units and receive the sold amount in your bank account, on which you need to pay taxes and other charges.
Before closing your SIP you can use a SIP calculator to estimate how your investments may grow over time. This can help you to see what happens when you stop your monthly contributions.
Now there are several ways to cancel an SIP. The process depends on how and where you originally registered the SIP.
Through Mutual Fund Apps
If you started your SIP through a mutual fund app or an online investment platform, you can usually cancel it from your account. Most platforms provide a dedicated option to manage or stop active SIPs, making the process quick and paperless.
Through the AMC Website
You can also close your SIP directly through the website of the Asset Management Company (AMC) that manages the mutual fund. Most AMCs allow investors to view and manage active SIPs through their online investor portal.
Through Bank Mandate Cancellation
If your SIP is linked to an auto-debit mandate, you can stop future deductions by cancelling the bank mandate. However, cancelling only the mandate does not always update your SIP records with the AMC or the investment platform.
Therefore, it is advisable to submit a SIP cancellation request as well, so that the SIP is officially marked as cancelled and future payment issues can be avoided.
Step-by-Step Guide to Close SIP Online
You can usually close an SIP online in just a few minutes through your investment platform by following these simple steps:
Step 1: Log in to Your Investment Platform
Log in to the investment platform or AMC website where you originally registered your SIP. Use your registered credentials to access your investment account.
Step 2: Select Active SIP
Go to the SIP or Investments section and find the active SIP that you want to cancel. Open its details to view the available management options.
Step 3: Cancel SIP Instruction
Then select the Cancel SIP or Stop SIP option. Take a look at the details and confirm your request. Some platforms may also ask you to verify using an OTP or another authentication method.
Step 4: Check Status
When you submit your request you should check the status of your SIP cancellation in your account. Most of the time you will get a message from the platform through email or SMS when they have finished processing your request.
Stopping SIP vs Withdrawing Funds
Understanding the difference between these two actions can help you choose the right option based on your investment goal:
| Basis | Stopping SIP | Withdrawing Funds |
| What happens here? | Your future SIP instalments are stopped, while you still hold your purchased mutual funds units. | Your existing mutual fund units are redeemed and the proceeds are credited to your registered bank account. |
| Existing investment | The units already purchased continue to stay invested in the mutual fund. | The redeemed units are removed from your investment portfolio. |
| Future investments | No further SIP instalments are deducted after the cancellation is processed. | Future SIP instalments continue unless the SIP is closed/cancelled separately. |
| Tax implications | Stopping an SIP does not create a taxable event. | Redemption may attract capital gains tax based on the type of mutual fund and the holding period. |
| Exit load | No exit load applies because no units are sold. | Exit load may apply if the units are redeemed within the applicable exit load period. |
When Should You Close Your SIP?
Some common situations where closing an SIP may be appropriate include:
- You have achieved your financial goal:
If you started putting money into an SIP for something like buying a house, paying for college or saving for when you are old, you can stop it when you have enough money.
- Your financial situation has changed:
If you are facing a temporary reduction in income or higher financial commitments, closing the SIP can help manage your monthly expenses.
- You want to change your investment strategy:
You may decide to stop an SIP if you want to put your money into a kind of investment like a different mutual fund or something else that is a better fit for what you want now.
- The fund no longer matches your goals:
Your risk appetite or financial goals may change with time. In these cases you can stop putting money into the fund you’re in and switch to a different one that is a better fit for you.
Common Mistakes to Avoid While Closing SIP
Some common mistakes to avoid to ensure that the cancellation process is completed correctly:
- Assuming that cancelling an SIP withdraws your investment:
When you stop an SIP, it only ends future instalments. The mutual fund units you have already purchased continue to remain invested until you redeem or sell them, which is a different process.
- Closing an SIP because of temporary market fluctuations:
Short-term market movements are a normal part of investing. You should make a decision based only on temporary price changes. This may not support your financial goals in the long run.
- Ignoring the processing period:
SIP cancellation requests take a few working days to be processed. If the next instalment has already been scheduled before that, it may still be deducted before the cancellation becomes effective.
- Cancelling only the bank mandate:
Stopping the auto-debit mandate alone may not cancel the SIP with the AMC or investment platform. It is advisable to complete the SIP cancellation process through the platform as well so that your records are updated correctly.
Final Thoughts
When you have an SIP, it is meant to help you invest money on a basis so you should think carefully before you stop it.
If your money goals or the amount of money you make or the way you invest has changed then it might be an idea to cancel the SIP.
You should also make sure to cancel the SIP through the correct way as paying attention to this can avoid problems that you do not need and keep your investments in line with what you want to do with your money.
FAQs
Yes, most mutual funds allow you to close your SIP at any time by submitting a cancellation request through your investment platform, the AMC website, or the authorised service provider. However, the cancellation may take a few working days to become effective.
No, closing an SIP only stops the future instalments. The mutual fund units you have already purchased continue to remain invested until you submit a separate redemption request to withdraw your investment.
The processing time usually ranges from 2 to 10 working days, depending on the mutual fund, investment platform, and the date of your next scheduled SIP instalment. An instalment already scheduled may still be deducted.
No, mutual funds generally do not charge any fee for cancelling an SIP. However, if you later redeem your mutual fund units, an exit load and applicable capital gains tax may apply, depending on the scheme and holding period.
Yes, you can start a new SIP in the same mutual fund or choose a different scheme at any time. A new SIP registration and, if required, a fresh bank mandate may need to be completed.
A market decline alone is usually not a sufficient reason to stop an SIP. If your financial goals and investment horizon have not changed, continuing your SIP may help you benefit from long-term investing and rupee-cost-averaging.
