Redemption is the process of withdrawing money from a mutual fund by selling your units back to the fund house at the current NAV.
When you redeem mutual fund units, the AMC cancels those units and credits the equivalent money to your registered bank account, typically within T+2 or T+3 business days (immediately for liquid funds). Redemption can be partial (sell some units, keep the rest) or full (exit completely). It triggers tax events (STCG or LTCG) and potentially exit load charges if done within the minimum holding period.
Redeeming is the act of cashing out your mutual fund investment. You can redeem all your units (exit completely) or just a portion (take out some money). Unlike FDs, there's no lock-in for most open-ended funds except ELSS. The amount you receive = units redeemed × current NAV minus any exit load.
Submit a redemption request online (app/website) or offline (physical form) before market cut-off (typically 3 PM).
Units are cancelled at that day's closing NAV if submitted before cut-off.
Exit load is deducted if within the load period (e.g., 1% if redeemed within 1 year for most equity funds).
STCG or LTCG tax is applicable depending on fund type and holding period.
Money credited to your bank account within T+2 (equity funds) or T+3 days; liquid funds: T+1.
You hold 500 units in an equity fund at NAV ₹280. You need ₹50,000. Units to redeem = ₹50,000 ÷ ₹280 = 178.57 units. If you've held these units for 2 years, no exit load applies. LTCG at 12.5% applies on gains above ₹1.25 lakh. Your remaining 321.43 units stay invested.