# STP and SWP: how scheduled transfers and withdrawals work

A SIP moves money from your bank into a fund. An STP moves it from one fund to another, and an SWP moves it from a fund to your bank.

Full page: https://discovermf.com/guides/stp-and-swp
Last checked 23 Oct 2026, from DiscoverMF.

## Systematic transfer plan (STP)

An [STP](https://discovermf.com/glossary/stp) redeems a fixed amount from one fund and invests it in another fund of the same fund house, on a schedule you choose, usually weekly or monthly. The source is often a liquid fund or another short-term debt fund and the target an equity fund. You invest a lump sum in the first, and it moves into the second over the months you set.

1. Invest the lump sum in the source fund.
2. On the fund house's website or app, MF Central or the registrar's website, choose **STP** on that fund.
3. Pick the target scheme, its plan and option, the amount, the frequency, the start date and the number of transfers.
4. Confirm with the OTP.

Some fund houses also offer variants, such as transferring only the gains each month. Check the fund house's terms.

## Systematic withdrawal plan (SWP)

An [SWP](https://discovermf.com/glossary/swp) redeems a fixed amount from a fund on a set date, usually monthly, and pays it into your bank account. The rest stays invested. It runs until the end date you set, until you stop it, or until the units run out. It is used to draw a regular sum from a lump sum, such as retirement savings.

Setting one up works like an STP: choose **SWP** on the fund, then the amount, the date and the bank account. The [SWP calculator](https://discovermf.com/calculators/swp) shows how long monthly withdrawals last at a return you choose.

## How they are taxed

Each STP transfer and each SWP withdrawal is a redemption of units, so each is a sale for tax. Only the gain in it is taxed, not the whole amount. If ₹10,000 is withdrawn and the units sold cost ₹8,500, the taxable gain is ₹1,500.

The rate depends on the kind of fund and how long each unit sold was held, oldest units first. [How mutual funds are taxed](https://discovermf.com/guides/mutual-fund-tax) has the rates. No tax is deducted for resident investors; you pay it when you file your return.

## Exit load and stamp duty

An exit load applies to any units redeemed while still inside the fund's exit-load period, including units sold by an STP or SWP. Every STP transfer into the target fund is a purchase, so it carries the stamp duty of 0.005%, as any purchase does.

## Questions

### Can an STP move money to another fund house's fund?

No. Both funds must be with the same fund house. To move money across fund houses, redeem from one and buy from the other.

### Is SWP money taxed like interest?

No. Only the capital gain in each withdrawal is taxed, at the capital gains rate for that fund and holding period.

### Is tax deducted on SWP withdrawals?

Not for resident investors. For NRIs, the fund house deducts tax on the gain in each withdrawal.