Exit load in mutual funds: meaning and calculation

An exit load is a fee some mutual funds charge when you sell units within a set time after buying them. It is taken out of the money you receive. It is a percentage of the NAV (the price of one unit) on the day you sell. SEBI caps it at 3% of NAV for open-ended schemes, and the money goes back into the fund.

Two ideas about it are wrong. One is that the load is charged only on your profit. The other is that a SIP, which invests a fixed amount at regular intervals, has no exit load.

What is an exit load in mutual funds?

An exit load is a fee some funds charge if you sell (redeem) units within a period the scheme sets. SEBI's rules define it as the charge a fund levies at the time units are redeemed or repurchased.

Redeeming simply means selling units back to the fund. The price you get is worked out like this:

Repurchase price = NAV on the day × (1 − exit load, if any)

So a 1% load on units worth ₹90,000 is ₹900, and you receive ₹89,100.

The load is only ever charged on the way out. SEBI's rules say there shall be no entry load on any mutual fund scheme, so buying units never carries one. For an open-ended scheme, the exit load cannot go above 3% of NAV.

Why do some funds charge an exit load?

SEBI has stated a reason only for the two exit loads it sets itself. Other loads are set by each fund house.

For life cycle funds, SEBI says the load is there to encourage financial discipline. For liquid funds, a SEBI paper noted that some investors put money in and take it out within a very short period. That makes the fund harder to manage and affects the returns of investors who stay invested for longer.

Whatever the reason, the money goes back into the fund, not to the fund house.

How is an exit load calculated?

An exit load is a percentage of the NAV, applied to the units you sell. So it is charged on the whole value sold, not only on your gain. SEBI's rules say the repurchase price is the prevailing NAV minus the exit load, worked out as a percentage of that NAV.

That is why it applies even on a loss. Take an assumed example. You buy 2,000 units at ₹50, so you invest ₹1,00,000. Five months later the NAV is ₹45, and the scheme document says 1% of the applicable NAV is charged on units sold within 365 days.

Step	Amount
Value of 2,000 units at ₹45	₹90,000
Exit load at 1%	₹900
You receive	₹89,100
Loss before the load	₹10,000
Loss after the load	₹10,900

The load did not wait for a profit. It came off the value you sold.

The clock for the load period runs from each unit's allotment date, the day the units were put in your name. Our guide on how to sell mutual funds online walks through placing a sale.

How does an exit load work on a SIP?

Only the instalments still inside the load period pay it, because the period runs from each instalment's own allotment date. Each instalment buys units at that day's NAV.

Here is an assumed example, not a real SIP. You invest ₹4,000 on the 5th of every month, from 5 January 2026 to 5 December 2026, which is 12 instalments. The scheme charges 1% on units sold before 365 days from allotment. On 20 February 2027 you sell everything.

Instalment 1 has been held 411 days and instalment 2 for 380 days. Both are past the period, so no load.
Instalment 3, bought on 5 March 2026, has been held 352 days. It is still inside the period, and so are instalments 4 to 12.
Suppose the units of those ten instalments are worth ₹44,000 on the day. The load is 1% of ₹44,000, which is ₹440.

How the last day of the count is treated is set by each fund's document.

When you sell only part of a SIP, one fund's document says units are redeemed first in, first out, so the oldest instalments go first. For units held in demat, the Income-tax Act uses the same first-in, first-out method.

Stopping a SIP does not sell any units, so no exit load arises. See how to stop or pause a SIP for the steps, and how SIP returns are taxed for the tax side of selling.

A switch sells units of one scheme and puts the money into another. An STP moves money between schemes the same way, by selling units of the first. The scheme's exit load can apply to both, and to an SWP (systematic withdrawal plan). See how to switch mutual fund schemes and SWPs.

What does "units in excess of 10%" mean?

Some funds let you sell a set share of each purchase free during the load period. The load is charged only on the units above that share, and each scheme sets the share.

One fund's document, the WhiteOak Capital Multi Asset Allocation Fund's, lets you sell 10% of each purchase free within 30 days of allotment. Units above that 10% pay 1% if sold within 30 days, and nothing after.

Here is that arrangement worked on an assumed sale. You hold 2,000 units from one purchase and sell all of them 20 days after allotment, at a NAV of ₹48.

200 units (10%) go free.
The other 1,800 units are worth 1,800 × ₹48 = ₹86,400.
The load is 1% of ₹86,400, which is ₹864.

The share differs from fund to fund. Another document, the Bank of India Business Cycle Fund's, frees up to 10% of units within 3 months. As on 31 August 2026, HDFC's aggressive hybrid fund lets you take out up to 15% of your units free. ICICI Prudential's conservative hybrid fund allows up to 30%.

The way the free share is counted can also differ. In the WhiteOak document, it is worked out for each purchase separately, oldest units first. It applies only during the load period, and an unused free share is not carried forward. Check how your fund's document counts it.

When does an exit load not apply?

An exit load stops applying after the period your scheme document sets, or when the document says the load is nil. After that, you sell at the NAV with nothing taken off.

SEBI's rules also bar the load in some other cases:

Bonus units, and the units you get when IDCW is reinvested. IDCW is a payout a fund makes from its income or gains.
When a fund changes its basic features or merges with another scheme, and offers you a way out at the prevailing NAV.
When the fund house changes hands, and you are offered the option to leave its funds at NAV.
When a new fund fails to invest the money it raised in time. What is an NFO explains how that works.
In a few ETF cases, when units are redeemed directly with the fund house. Our page on ETFs and index funds covers ETFs.

ELSS funds are a separate matter. ELSS stands for equity linked savings scheme. One ELSS fund's document says "Exit Load: Nil", but the units are locked in for 3 years from allotment. A lock-in is a period when you cannot sell at all. For what happens when the three years are up, see what to do when your ELSS lock-in ends.

Which funds charge an exit load?

SEBI sets the load itself for only two kinds of funds. Every other scheme sets its own, and it can differ even between funds in the same category.

Liquid funds. They must charge a load on exits within 7 calendar days. The scale is graded, and a SEBI letter to AMFI of 15 October 2019 sets it. It is a percentage of the redemption proceeds:

Day 1: 0.0070%
Day 2: 0.0065%
Day 3: 0.0060%
Day 4: 0.0055%
Day 5: 0.0050%
Day 6: 0.0045%
Day 7 onwards: 0.0000%

On ₹1,00,000 of redemption proceeds on day 3, the load is ₹6. From day 7 it is nil. Overnight funds usually carry no exit load; check the scheme document. See liquid funds for the category.

Life cycle funds. SEBI's rules set their load. It is 3% on exits within one year of investment, 2% within two years and 1% within three years.

For all other funds, the scheme document decides. A few examples from single funds' documents:

Tata Aggressive Hybrid Fund charges 0.50% on or before 30 days, and nil after (as on 31 August 2026).
HDFC Nifty 50 Index Fund charges 0.25% if units are redeemed within 3 days of allotment. After 3 days there is none (document of 21 November 2025).
Tata's Nifty G-Sec Dec 2026 Index Fund shows "NIL". So does its Nifty SDL Plus AAA PSU Bond Dec 2027 60:40 Index Fund (as on 31 August 2026).

These are single funds, not rules for their categories. For what each category is, see aggressive hybrid funds, index funds and ELSS funds.

Where does the exit load money go?

The exit load goes back into the scheme, to the investors who stay. SEBI's rules credit it to the scheme, so it does not become the fund house's income.

If GST is due on the load, that tax is paid out of the load first. Only what is left is credited to the scheme.

The fund house is paid in a different way, and how mutual fund companies make money explains it. For the yearly fee, see the expense ratio. For the full list of charges, see hidden fees in mutual funds.

How do you find a fund's exit load?

Open the scheme information document (SID), the fund's official rulebook. It has a "Load structure" row near the front, with a section on load further in. The key information memorandum has it too.

The SID gives the exit load as a percentage of NAV, along with the period it applies for. Our scheme related documents page links to each fund house's documents.

Check three things:

The percentage.
The period, and the date it is counted from. The clock is per allotment date.
Any free share of units, and how it is counted.

A change to the load is published as an addendum to the documents, and your account statement shows the load that applies. A new or higher load applies only to money you invest after the change.

Koshex customers can redeem (sell) units on Koshex, and Koshex helps you choose a fund that suits your goal and timeline. You can browse all mutual funds to start.

FAQs

What is an exit load in mutual funds?

An exit load is a fee some mutual funds charge if you sell units within a set time after buying them. SEBI's rules define it as the charge a fund levies when units are redeemed or repurchased. It is taken out of the price you receive, and an open-ended scheme cannot charge more than 3% of NAV.

Is exit load charged on profit or on the whole amount?

It is charged on the whole value of the units you sell, not on the profit. Say you bought at ₹50 and sell 2,000 units at ₹45 inside a 1% load period. The value is ₹90,000, the load is ₹900, and you receive ₹89,100, even though you made a loss.

Is exit load charged after 1 year?

Only if the scheme's own load period runs past a year. Each scheme states its period in its document. HDFC's credit risk fund document, for example, lets 15% of the units go free. It charges 0.50% on the rest if they are redeemed after 12 months but within 18 months. Life cycle funds charge 2% in the second year and 1% in the third.

Does an exit load apply to a switch, STP or SWP?

Yes, the scheme you leave can charge its exit load. One fund's document says a switch is a redemption at the applicable NAV, subject to exit load, if any. Another says an STP transfer redeems units of the source scheme, subject to exit load. The same document says an SWP is subject to the scheme's exit load. Check your fund's document for each.

Can the fund house raise the exit load on units I already hold?

SEBI's rules say any new or higher load applies to prospective investments only. So a load added or raised after you invest does not apply to units you already hold. It applies to money you invest after the change.

How does an exit load affect tax on my gain?

You receive the repurchase price, which is already net of the exit load. Your gain is the value before the load, minus the load, minus what you paid. The load is not deducted twice.

What is the difference between an exit load and an expense ratio?

An exit load comes out of the money you receive when you sell inside the load period. The expense ratio is the fund's yearly fee, shown as a percentage of your money and taken out of the fund's value. One applies on selling, the other runs inside the fund all year.