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    Aditya Birla Sun Life AMC Limited

    Mutual Fund Redemption- Steps of How to Redeem Mutual Funds

    Aug 15, 2023
    4 min
    4 Rating

    Want to redeem your mutual fund investment? Read this post to learn the detailed steps for online and offline redemption.

    You know it's time to redeem your mutual fund investment when it has achieved its objective or if it is not working as expected. Thanks to digitalization, investors can conveniently and quickly redeem their mutual fund investments from the comfort of their homes. Alternatively, you can also complete mutual fund redemption offline.

    Here’s everything you should know about redeeming your mutual fund investments-

    What is Mutual Fund Redemption?

    When an investor invests in a mutual fund scheme, the fund house allocates units according to the scheme’s NAV (Net Asset Value) and investment amount. Mutual fund redemption is when the investor sells the purchased scheme units.

    After redemption, the investor can withdraw the amount to their bank account or switch to another scheme offered by AMC.

    Also read: What is NAV in mutual funds

    How to Redeem Mutual Fund Investment?

    Here are the different methods to redeem your mutual fund investment-

    1. Online Mutual Fund Redemption Through AMC Website

      If you’ve invested in a mutual fund through the AMC website, follow these steps for redemption-

      • Visit the official website of the AMC and log in to your account.

      • Click on ‘Transact Now’ tab and select Redemption option

      • Select the folio number and scheme you’d like to redeem

      • Select ‘Scheme name’ from the dropdown menu

      • Enter the number of scheme units or amount you'd like to sell (Investors can sell all the units or some as per their requirement).

      • Confirm your redemption request.

      • Once the request is processed, the funds are deposited into the registered bank account through NEFT as per the scheme category TAT.

    2. Online Mutual Fund Redemption Through Demat or Trading Account

      Many investors choose to invest in mutual funds through their Demat/trading accounts. If you’ve done the same, you can make online mutual fund redemption through the same Demat/trading account. Follow these steps-

      • Log in to your Demat/trading account.

      • Select 'Mutual Fund'.

      • Choose the scheme you'd like to redeem.

      • Enter the number of scheme units you'd like to redeem.

      • Confirm redemption request.

      • On successful redemption, the funds will be deposited into the bank account registered with the Demat/trading account through IMPS or NEFT within 2-3 working days.

    3. Offline Redemption Through AMC or Registrar's Office

      Investors can also redeem mutual fund investments offline by visiting the nearest AMC office. Fill out the redemption form and provide details like your PAN and folio number to make a redemption request. Alternatively, investors can also visit registrar offices to make a redemption request.

    4. Offline Redemption Through Agent/Distributor

      If you've made mutual fund investments through an agent or distributor, they can assist you in making a redemption. Request a redemption form from your agent/distributor, fill it up, and submit it. The agent/distributor will submit the form to the AMC office, and your redemption request will be processed within 4-5 days.

    Things You Should Keep in Mind When Redeeming Mutual Fund Investment

    While there are multiple methods to redeem your mutual fund investments, there are a few things you should remember while redeeming-

    • Exit Load

      Many mutual fund schemes have an exit load for investors who redeem the investment before a specified period specified in the Scheme Information Document (SID). If the scheme you've invested in has an exit load, you prefer redeeming after the specified duration.

      Also read : Exit Load in Mutual Fund: Meaning, Types, and Calculation

    • Securities Transaction Tax (STT)

      Equity mutual fund schemes also have an STT (Securities Transaction Tax) of 0.0001% on redemption. STT does not apply to the purchase of scheme units and non-equity mutual funds.

    • Capital Gains Tax

      Investors should also pay capital gains tax after redeeming mutual fund investments. The taxability depends on the scheme type and holding period. Consult with an investment or tax advisor to better understand the tax implications of mutual fund redemptions.

    Redeeming Your Mutual Fund Investment

    If you’re planning to redeem your mutual fund investments, these are the online and offline methods you can use to sell the scheme units and withdraw your investment. While the online methods are more convenient and quicker, you can also redeem offline if it better suits your requirements.

    If you want to redeem your investment as it is not delivering the expected returns, talk to an investment advisor who can assist you in building an investment portfolio according to your financial goals.

    Mutual Fund investments are subject to market risks, read all scheme related documents carefully.