How to Redeem Mutual Funds: Steps, Timelines, Tax

"I need money from my mutual fund. How do I take it out, and when will it reach my bank?" You redeem the units online on the platform where you hold them, choosing an amount, a number of units or the full holding. As of October 2026, liquid and overnight funds usually pay the next working day (T+1), equity funds in two working days (T+2), and SEBI's outer limit for most schemes is three working days. The money goes only to the bank account registered in your folio.

Before you click, check two things that change how much you actually receive: exit load and capital gains tax. Both are covered below.

Redemption timelines at a glance

"T" is the day your request is accepted, which depends on the cut-off time. For most schemes, a request before 3 pm on a business day gets that day's NAV, and one after 3 pm gets the next business day's NAV. SEBI revised liquid and overnight fund cut-offs in 2025, and the rules now depend on how the request is submitted, so read the note your platform shows for those funds. Weekends and market holidays are not counted.

If the AMC pays late beyond SEBI's limit, it is required to pay interest for the delay, at 15% a year under SEBI's mutual fund rules.

Partial vs full redemption

• By amount: You ask for, say, ₹30,000. The AMC divides it by the NAV to work out how many units to sell. Exit load, if any, is then deducted from that amount.
• By units: You choose exact units, useful when you want to sell only the units past their exit-load or tax holding period.
• Full redemption ("redeem all"): Every unit in that scheme and folio is sold. The folio stays open with zero balance unless you close it.

Units always leave in first-in, first-out (FIFO) order: the oldest units go first. That rule decides which units carry exit load and whether each gain is short-term or long-term. Our exit load explainer works through a FIFO example.

If you need cash only for a short time and want to stay invested, a loan against mutual funds is an alternative worth comparing.

Step-by-step: how to redeem online

1. Log in to the platform where the units sit: the AMC's site or app, MF Central, the registrar's portal (CAMS or KFintech), or your broker app. Units held in demat form are sold through your broker.
2. Check the bank account shown in the folio. If it is old or closed, update it first through a change-of-bank request with proof; redemption cannot go to any other account.
3. Choose the scheme and select "Redeem" or "Withdraw".
4. Enter the amount, units or "all units". The screen usually shows the approximate value and any exit load.
5. Stop the SIP first if you are exiting fully. Otherwise the next instalment will buy fresh units. See how to pause or stop a SIP.
6. Confirm with OTP. Save the confirmation with its transaction reference number.
7. Track the credit. Expect it in your bank by the timelines above. The AMC or registrar sends a transaction statement by email and SMS.

Worked example: partial redemption, load and tax

Kavita holds 2,000 units of an equity fund bought on 1 August 2025 at a NAV of ₹40, so her cost is ₹80,000. On 20 October 2026, the NAV is ₹50 and she needs ₹30,000. The fund charges a 1% exit load if units are redeemed within 12 months of purchase.

Units sold: ₹30,000 ÷ ₹50 = 600 units.

Exit load: The units are about 14.5 months old, past the 12-month window, so the load is nil.

Capital gain: 600 × (₹50 − ₹40) = 600 × ₹10 = ₹6,000, long-term because she held them for more than 12 months.

Tax: Equity long-term gains are taxed at 12.5% only on the total that crosses ₹1.25 lakh in a financial year. If this ₹6,000 is her only equity gain in 2026-27, the tax is nil.

Payout: ₹30,000 reaches her registered bank account within T+2 working days, with no TDS because she is a resident.

Now suppose the units had been bought on 1 March 2026 instead. They would be less than 12 months old, so:

• Exit load: 1% × ₹30,000 = ₹300, and she receives ₹29,700.
• Gain: the exit load reduces the sale value, so the gain is ₹29,700 − ₹24,000 (600 × ₹40 cost) = ₹5,700. It is now short-term, taxed at 20% = ₹1,140, plus 4% cess.

Waiting a few months can save both load and tax. Our guide to capital gains tax on mutual funds covers debt fund rules, which differ. To see what a lumpsum left invested might grow to instead, use the lumpsum calculator.

If the redemption money has not arrived

1. Check the transaction status on the platform: "processed", "paid" or "rejected", with the payment date.
2. Check the bank account in the folio. A payout to an old account bounces back to the AMC and needs a bank-change request.
3. Write to the AMC or registrar after the timeline has passed, quoting folio, scheme, request date, amount and transaction reference.
4. Escalate to the AMC's investor service officer. Each AMC lists one on its website.
5. File on SEBI SCORES at scores.sebi.gov.in. The AMC must respond with an action taken report within 21 calendar days, and you can ask for a review within 15 days if unsatisfied.
6. Go to SMART ODR at smartodr.in if the issue is still unresolved after SCORES.

Ask for the delay interest too if payment came late beyond the SEBI limit.

Sample request to the AMC or registrar

Subject: Redemption proceeds not received, Folio [number]

I placed a redemption of [units / ₹ amount] in [scheme name], folio [number], on [date], reference [number]. The proceeds have not been credited to my registered bank account ending [last 4 digits], although the SEBI timeline has passed. Please credit the amount with interest for the delay as applicable, and confirm the payment reference.

Name: [name], Registered mobile: [number]

Key takeaways

• Redeem by amount, units or in full on the platform where you hold the units; money goes only to the folio's registered bank account.
• As of October 2026: liquid and overnight funds pay T+1, equity funds T+2, and SEBI's outer limit is three working days for most schemes.
• A 3 pm cut-off decides the NAV for most schemes; liquid and overnight funds have separate rules.
• FIFO decides which units are sold, and so the exit load and whether gains are short- or long-term.
• Stop the SIP before a full exit, and escalate delays from the AMC or registrar to the investor service officer, SEBI SCORES and SMART ODR.