Will SIP Contributions Be Deducted Directly from Salaries? SEBI Introduces New Proposal—Get the Full Details

In a move aimed at simplifying the investment process for salaried individuals, India’s market regulator, the Securities and Exchange Board of India (SEBI), is preparing to take a significant step. SEBI has issued a new proposal under which SIP (Systematic Investment Plan) amounts could be deducted directly from employees’ salaries and invested into mutual funds.

If this rule is implemented, employees will no longer need to make separate monthly deposits for their SIPs. Just as contributions for the EPF (Employees’ Provident Fund) and NPS (National Pension System) are automatically deducted from an employee’s salary, SIP amounts could also be deducted directly in a similar manner. SEBI has sought public feedback on this proposal. Members of the general public and investors have until June 10, 2026, to submit their comments. Following this period, the regulations will be finalized.

What does this imply? If the new rule comes into effect, employees will be able to authorize their employers to deduct a specific amount from their monthly salary and deposit it into a mutual fund SIP. This investment process will be entirely contingent upon the employee’s explicit consent; no company will be permitted to make such deductions without prior authorization.

SEBI believes that this initiative will foster a habit of regular investing among the public. Often, SIPs get interrupted due to insufficient bank account balances or failed auto-debit transactions. However, with direct deductions from salaries, investments would continue to be made consistently and on time.

Benefits for New Investors: Experts suggest that this facility could be particularly advantageous for individuals who are venturing into investing for the very first time. Many people find the process of setting up a SIP to be daunting; however, enabling direct investment through salary deductions would significantly simplify the entire procedure.

Ensuring Investor Protection: SEBI has clarified that all necessary regulations designed to safeguard investors’ interests will remain in force. Investor KYC (Know Your Customer) compliance will be mandatory, and comprehensive records will be securely maintained. Most importantly, any proceeds generated from the mutual funds—including redemption amounts—will be credited directly to the investor’s personal bank account, rather than to the company’s account. This initiative by SEBI is being hailed as a pivotal step toward promoting investment across the country and encouraging individuals to engage in long-term savings and wealth creation. However, this is currently just a proposal, and the final decision will be taken after receiving public opinion.