By Deepti verma
A Systematic Investment Plan (SIP) allows investors to contribute small, regular amounts to mutual funds, making wealth creation more disciplined and convenient. Investors need to stop their ongoing SIP investments because of financial limitations or goal changes or when they decide to move their funds to different investment options. The correct cancellation procedure will result in a penalty-free process.
Key Points to Know Before Cancelling
Investors need to understand these essential points before they decide to stop their SIP investments.
- No Penalty for SIP Cancellation: The cancellation of SIP investments through mutual fund houses and their platforms results in no additional fees for investors.
- Investment Stays Intact: The termination of SIPs prevents new payments from being made but existing purchased units stay in your investment portfolio until you decide to sell them.
- Timeline Matters: Fund houses need investors to provide advance notice of 15 to 30 days before their next SIP payment date to stop automatic withdrawals.
Ways to Cancel a Mutual Fund SIP
- Through AMC (Asset Management Company)
- You should access the website of your mutual fund company through its official website.
- You need to access your account through your folio number or registered credentials after logging in.
- Select the SIP you want to cancel from the SIP section of the platform.
- You should submit a request to cancel your SIP investment through SIP.
The cancellation process for SIPs through AMCs requires either a digital form submission through their website or a physical form at their branch or registrar office operated by CAMS/KFintech.
- Through Online Platforms and Brokers
You can stop your SIP investments through the investment platform or broker or fintech application where you initially made your investment.
- After logging in to your account you should access the “SIP” or “Ongoing Investments” section.
- Choose the scheme you want to cancel and then pick “Cancel SIP” from the available options.
- The platform will send your cancellation request to the AMC which manages your investment.
- Through Banks (If ECS/NACH Mandate Is Used)
- The majority of SIP investments use bank account auto-debit functions for payment processing.
- You should contact your bank to cancel the ECS or NACH mandate if the AMC or platform fails to process your request in time.
- The bank requires you to present a cancellation form either at their branch location or through their online banking system based on their established procedures.
Things to Keep in Mind
- Check Minimum Lock-in: If your SIP is in an ELSS (Equity Linked Savings Scheme), you cannot withdraw units until the 3-year lock-in period ends. However, you may stop further instalments.
- Timely Submission: Submit your cancellation request at least 2–3 weeks before your next SIP due date to avoid another instalment being debited.
- Alternative Option – Pause SIP: Some fund houses offer a “pause” facility, allowing you to skip instalments for a limited period without fully cancelling. This can be useful for temporary financial issues.
Conclusion
The process of mutual fund SIP cancellation remains simple but investors need to organize their plans ahead of time to prevent unwanted fund withdrawals. The success of SIP cancellation depends on submitting your request on time through the AMC or investment platform or bank system. The units you have already purchased through SIP will stay in your account until you decide to redeem them even though you cancel your SIP subscription.
By understanding the procedure and rules, investors can make informed choices that align with their financial goals and changing circumstances.
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