Mutual Fund Redemption - How to Redeem your Fund Units? (2024)

FAQs

Mutual Fund Redemption - How to Redeem your Fund Units? ›

If you have purchased your mutual fund units through an AMC, you can simply log in to the portal and sell your units. Investors can choose to redeem some units or all units based on their preference. Some AMC's also have mobile applications through which you can do the same process.

If the investment was made directly, one can fill up a redemption form, downloaded from the MF website, and submit it to the AMC or RTA office. Alternatively, if one is using the web interface of the MF, the same can be used to redeem.

Online Redemption through Trade or Demat Account

Select the mutual fund scheme from which you want to redeem the units. Set the number or price of units to be purchased. Confirm the acceptance request. Wait for an electronic payout (NEFT or IMPS) in your linked bank account.

The mutual fund withdrawal process involves submitting a redemption request through the fund house's online portal or physical form, specifying the number of units or amount to be redeemed, followed by the crediting of funds to the investor's registered bank account.

In some cases, Mutual Funds may suspend redemptions or sales temporarily due to market volatility, liquidity concerns, or specific circ*mstances affecting the fund. Check with the Mutual Fund company to see if there are any temporary suspensions in place.

T+2 and T+3 business days.

The answer is yes; however, there are certain things to keep in mind while withdrawing your mutual funds. Also, some types of mutual funds can be withdrawn only after a certain period.

The decision on how long years you should stay invested in a scheme depends on the objective of the investment. It is advisable to redeem funds only when the goal is achieved or the objective is accomplished. Any untimely or premature redemption can have an adverse impact on the value of the investment.

Why is a lock-in period imposed on ELSS? ELSS funds have a lock-in period to promote long-term investment in equities. This encourages investors to stay committed and benefit from potential market growth over time. It also makes investors eligible for a tax rebate under Section 80C of the Income Tax Act.

Are mutual funds taxed when cashed out? ›

If you hold shares in a taxable account, you are required to pay taxes on mutual fund distributions, whether the distributions are paid out in cash or reinvested in additional shares. The funds report distributions to shareholders on IRS Form 1099-DIV after the end of each calendar year.

A shareholder fee that some funds charge when investors redeem (sell) mutual fund shares. Redemption fees, which must be paid to the fund, are not the same as and may be in addition to a back-end load, which is typically paid to a broker. The SEC generally limits redemption fees to 2% of the sales amount.

You might also make money from your fund shares by selling them back to the fund, or redeeming them, if the underlying investments in the fund have increased in value since the time you purchased shares in the funds.

Understanding ELSS redemption

ELSS Mutual Funds come with a lock-in period, typically three years. During this lock-in period, investors cannot redeem or withdraw their investments. However, once the lock-in period is over, investors have the flexibility to redeem their ELSS units.

Mutual funds are liquid assets, and as long as you invest in open-end schemes, be they equity or debt, it's easy to withdraw your investments at any time. Moreover, there are no restrictions.

Tax Harvesting

For instance, if an investor invested Rs 3 lakh in an Equity Fund in January 2024, with a 20% annual return and redeemed it in February 2025 for Rs 3.60 lakh, the capital gains of Rs 60,000 remained tax-free as it stayed below the Rs 1 lakh threshold for that financial year.