How to Redeem Mutual Fund Online? Step-by-Step Guide for Fast Withdrawal

Many new mutual fund investors often worry about how to redeem mutual funds online, especially when they are close to their financial goal. They think the process is complicated and long. But that’s not the case.

The mutual fund redemption process is actually quite simple and easy. This guide walks you through how to withdraw mutual funds online and other key withdrawal details so you know exactly what to do. 

There is no ‘right’ time to redeem mutual funds. However, many investors may choose to do so in the following situations:

• Financial goals have been achieved: Investors often start the mutual fund redemption process when they are close to achieving the linked goal, like the child’s higher education or home loan down payment. 
• Emergencies: Sometimes investors may have to redeem MF investments to meet a sudden financial emergency like medical emergencies or job loss. That’s why it’s always wise to create a separate emergency fund for such expenses. 
• Scheme underperformance: Investors may also decide to exit a scheme due to consistent underperformance. This does not mean short-term fluctuations, but prolonged underperformance. 
• To book profits: When markets are high, investors may decide to make a whole or partial redemption from mutual funds to book profits. However, it's generally better to sell units when the linked goal is achieved, instead of trying to time highs for instant gains.

Before you learn how to withdraw mutual funds online, let’s first understand the types of MF redemptions:

• Full mutual fund redemption: In this case, the investor sells all the units of the scheme.
• Partial mutual fund redemption: Redeem only a specific number of units (or amount), keeping the rest invested. 
• Systematic withdrawal plans: Withdraw a fixed amount or number of units at regular intervals, while the rest stay invested. 

The exact process for redeeming mutual funds online may vary slightly depending on the platform through which you invested. However, the overall steps are largely similar. 

If you invested directly with an AMC, through an RTA, or via an online investment platform, here's how you can generally redeem your mutual fund units online. 

• Step 1: Visit the AMC or aggregator website.
• Step 2: Log in using your folio number or PAN details (or the specific login credentials for the website).
• Step 3: Select the scheme for redemption.
• Step 4: Specify the type of redemption and the number of MF units (or the redemption amount).
• Step 5: Recheck the redemption details and click ‘Confirm’.
• Step 6: Enter the OTP sent to your registered number to complete the process.
   

Once you complete these mutual fund redemption process steps, your investment amount will be credited to your registered bank account (depending on the time taken to process the request). 

*Note that AMCs only offer the mutual fund redemption process for their own schemes. 

When learning how to redeem mutual funds online, it is also important to understand the cut-off timings and applicable NAV. This is because the time at which you submit your redemption request can determine the NAV used to process your transaction. 

As per current SEBI regulations, the cut-off time for most open-ended mutual fund schemes, including liquid funds, is 3:00 PM on a business day. Overnight mutual fund schemes have a separate cut-off time of 7:00 PM.

Redemption requests can still be placed after the applicable cut-off time. However, a different NAV will apply. Here’s what this means:

*Overnight funds not included. 

Also note that in some cases, exit loads may apply if you withdraw from the scheme before a minimum time period, refer Scheme Information Document of mutual fund schemes.

Many investors also wonder when mutual fund redemptions are credited into the bank account. The processing time generally depends on the type of mutual fund scheme, not on the mode of redemption request. .

Typically, redemption proceeds are credited within the following timelines:

*These timelines are indicative and may vary depending on the scheme, banking system, and applicable regulatory requirements. Please refer to your scheme information documents for the applicable redemption timeline. 

Now you know how to redeem mutual funds online. The process is actually super easy and involves just 3 key steps:

• Log into your investment platform.
• Select the scheme, number of units, and redemption type.
• Confirm with an OTP.

But do remember the rules around cut-off timings and NAV applicability before starting the mutual fund redemption process. 

1. How much money will I receive upon mutual fund redemption?

The redemption amount generally depends on the number of units redeemed and the applicable NAV. A simple way to estimate it is:

Redemption Amount = Number of Units Redeemed × Applicable NAV

However, the final amount credited to your bank account can be lower if exit load, STT (for equity funds), and other charges is deducted from the redemption proceeds. 
 

2. How to withdraw mutual fund offline?

If you don’t want to redeem mutual funds online, you can complete the process offline as well. Here’s how to withdraw mutual funds offline:

• Visit the AMC or Registrar’s office.
• Fill in the redemption request form, including holder’s name, folio number, etc. 
• Submit the duly filled and signed form.
   

3. Can I redeem only a portion of my mutual fund portfolio?

Yes. You can redeem only a few units or a specific amount, keeping the rest invested in the scheme. This way, you can meet your needs without liquidating your entire investment.
 

4. Can I withdraw my mutual fund investments at any time?

Yes. For most open-ended mutual funds, you can withdraw your MF investments at any time. However, there may be exit loads applicable on redemptions if you withdraw before the minimum investment period ends. 
 

5. What are the tax implications of mutual fund redemptions?

Mutual fund redemptions primarily trigger capital gains taxes, which are calculated on the basis of the fund type and holding period in the following way:

1. Equity funds:

• Sold within 12 months from the date of purchase: 20% STCG
• Sold after 12 months from the date of purchase: 12.5% LTCG above Rs. 1.25 lakh exemption/year.

2. Debt funds: 

Always at slab rate, regardless of holding period.