SWP

Investor using dividend for cash flows it will make sense to switch to growth option and using systemic withdrawal plan (SWP) , as this will lower his tax liability considerably after Government's decision to introduce a 10% dividend distribution tax on dividends that investor receives from equity or equity - oriented mutual funds . Investor who has completed more then a year to switch from dividend option to growth options . Investor do this switch a year after the investment to avoid paying exit load and also avoid any short term capital gain tax . Once the investor moves to growth option and withdrawal using SWP , tax will be paid on only the profit earned and the tax liability would be far lower . This is because long term capital gains up to Rs. 1 Lakh per year is tax free .