How to Withdraw Money from Mutual Funds
Withdrawing money from a mutual fund (also called redemption) is the process of selling your mutual fund units and receiving the proceeds in your bank account. In India, withdrawals from open-ended mutual funds can be made anytime (except for lock-in funds like ELSS). The entire process is digital and the money typically reaches your bank account within 1-3 business days, depending on the fund type.
Step-by-Step Withdrawal Process
- Log in to the platform where you originally invested (AMC website, broker app, MF Central, CAMS portal, etc.).
- Navigate to your portfolio or folio details.
- Select the fund from which you want to withdraw.
- Choose "Redeem" and enter the amount or number of units you wish to withdraw.
- Confirm the redemption request (some platforms require OTP verification).
- Redemption is processed at the applicable NAV; proceeds are credited to your registered bank account.
How Much Can You Withdraw?
- You can withdraw any amount from your investment, from Rs 500 minimum up to your entire holding.
- Some funds set minimum redemption amounts; check the fund's scheme information document.
- If you have an SIP running, withdrawing all units does not stop the SIP; you need to separately cancel the SIP mandate.
Withdrawal Restrictions
| Situation | Impact |
|---|---|
| ELSS fund within 3-year lock-in | Cannot withdraw; must wait for each instalment's lock-in to expire |
| Withdrawal within exit load period (usually 1 year for equity) | Exit load deducted from proceeds (typically 1%) |
| Close-ended fund before maturity | Generally cannot be redeemed before maturity; may be traded on exchange |
What Happens to Tax on Withdrawal?
Every withdrawal is a taxable event. Capital gains are calculated as: redemption value minus original investment cost for each unit. Keep records of your purchase NAV and redemption NAV for tax filing. Your AMC or investment platform typically provides a capital gains statement at the end of the financial year, which simplifies tax filing.
Requesting Capital Gains Statement
Download your consolidated capital gains statement from CAMS (camsonline.com) or KFintech portal. Input your PAN; the system generates a consolidated statement across all AMCs and all funds where you have transacted. This is the key document for mutual fund-related income tax filing (Schedule CG in ITR).
Key Takeaway
Withdrawing money from mutual funds is simple and quick for open-ended funds. Always plan withdrawals keeping exit load periods and tax implications in mind to maximise your net payout. Use the Lemonn app to monitor your portfolio value in real time and plan strategic, tax-efficient withdrawals from your mutual fund investments.
