Exit loads: what they are (and what they are not)
An exit load is a redemption fee set by the fund, separate from tax — here is how it works.
General educational information on Indian mutual-fund taxation — not tax or investment advice. Tax rules and figures change and depend on your individual circumstances; consult a qualified professional before acting on any of this.
Not tax or investment advice.
What an exit load is
An exit load is a fee charged by the fund house when units are redeemed within a specified period. A common structure is 1% within 1 year of purchase, with no load after that — but the period and rate vary by scheme.
How it is applied
The load is a percentage of the redemption value and is deducted from the amount paid out. For example, a redemption of ₹50,000 of units that still attract a 1% load returns ₹49,500 before any tax on the gains.
It is a cost, not a tax
An exit load is a scheme cost, not a government levy, and it is separate from capital-gains tax. The exact load for a scheme is stated in its Scheme Information Document (SID) and factsheet.
Exit-load terms are set by each fund and change over time; check the scheme's current SID.