Exit load: meaning and how it is charged

How it works

Each scheme states its exit load in its scheme documents. A common pattern for equity funds is 1% if you redeem within one year of buying, and nothing after that. Liquid and some debt funds use a short, graded schedule (for example, a small charge if you redeem within the first week). Many funds have none.

Example: you redeem units worth ₹1,00,000 within the exit-load period at 1%. The fund deducts ₹1,000 and pays you ₹99,000. If you redeem after the period, you get the full amount.

Who gets the money

The exit load is credited to the scheme itself, so it goes back to the investors who stayed. It is not a fee paid to the AMC or to your distributor. Entry load, which was a charge when you bought, has been banned in India since August 2009.

SEBI's cap

SEBI sets the maximum exit load. The cap was reduced from 5% to 3% as part of the changes reported in September 2025, and the new SEBI (Mutual Funds) Regulations that took effect on 1 April 2026 continue to allow only SEBI-approved exit load charges within the expense framework. Most schemes charge far less than the cap.

Exit load and SIP

Each SIP instalment is a separate purchase with its own exit load period, and units are redeemed first-in, first-out. If you start a SIP and redeem a year later with a 1-year load, only the instalments less than 12 months old carry the charge. Plan withdrawals around this.

Exit load vs lock-in

• Exit load: you can still redeem; you pay a fee if you do it early.
• [Lock-in](/learn/glossary/lock-in): you cannot redeem at all until the period ends (for example ELSS: 3 years).

How to avoid paying it

1. Read the exit load in the scheme information document and the factsheet before you invest.
2. Match the fund to your timeline. If you may need the money in months, pick a fund with no exit load or a short-term category.
3. When you must redeem, check which units are exit-load-free and sell those first if the platform lets you choose (many follow first-in, first-out).