Two minutes post the check-in time of your flight, and the airline doesn’t let you in? Yes, that’s what typically happens when you transact with mutual funds. Mutual funds are priced at their Net Asset Value (NAV), which is the present value of each unit of the mutual fund. All mutual fund units are purchased and sold at the applicable NAV at the time of the purchase.
Nevertheless, NAV is declared at the end of the trading day. Then, how do you know which NAV is applied to your mutual fund transaction? To answer this question, let’s understand what is cutoff time in a mutual fund.
What Is Cut-Off Time in Mutual Fund?
While you can buy and sell mutual fund units at any time, the applicable NAV depends on fixed timelines. SEBI has prescribed specific timelines that must be followed when deciding the applicable NAV on any mutual fund transaction. These timelines are referred to as ‘cut-off time’ in mutual funds.
How Cut-Off Time Determines NAV?
The applicable NAV is that of the same day if the mutual fund house receives the specified amount before the cut-off time. However, if the fund house receives the amount post the cut-off time, the next day’s NAV is applicable. Any requests made after the cut-off time will automatically be processed on the next day’s NAV.
Therefore, cut-off timings are key to determining which day’s NAV applies to a mutual fund transaction. Investors can also check the applicable NAV in the transaction statement upon the completion of the process.
Cut-Off Times by Fund Type (India Context)
You can confirm the cut-off time of your investment through this table:
| Scheme Type / Transaction | Cut-off / Deadline | Applicable NAV Rule |
| Liquid Funds & Overnight Funds | Subscription (including switch-in) by 1:30 p.m. | If the application and funds realisation are before 1:30 p.m., the previous day’s NAV applies |
| Liquid Funds & Overnight Funds | Redemption (including switch-out) by 3:00 p.m. | If the redemption request is made by 3:00 p.m., the closing NAV of the same day (or the day before the next business day) applies |
| All Other Schemes (e.g. Debt, Equity not Classified as Liquid) | Subscription (including switch-in) by 3:00 p.m. | If the application and the funds are received within the time, same day NAV applies; otherwise, the next business day’s NAV |
| All Other Schemes | Redemption / Switch-out by 3:00 p.m. | Redemption requests by 3:00 p.m. receive same-day NAV; after that, the next business day NAV applies. |
| Overnight Schemes (Revised: as of June 1, 2025) | Offline requests by 3:00 p.m.; Online requests by 7:00 p.m. | Updated cut-off for online requests for overnight schemes; offline remains earlier deadline |
SEBI’s Rules on Realisation-Based NAV
The above table highlights the applicable rules on the basis of when the request is received by the mutual fund house.
SEBI’s realisation-based NAV rule suggests that the NAV is determined on the basis of when the funds are realised by the mutual fund house, and not when the transaction is initiated. This rule is effective from February 1, 2021, to ensure fairness and transparency in the application process of mutual funds.
Cut-Off Time Nuances (Investors’ Perspective)
Some nuances related to cut-off time of mutual funds for investors, include:
- Transaction type: Whether it is a purchase transaction, a redemption, or a switch from a different mutual fund, each can have a different cut-off time.
- Mode of investment: A lump sum investment made today before 3 pm will attract the NAV applicable for today. This is the NAV declared at the end of the day today. For SIP investments, if the SIP installment date is the 5th of each month, the fund house must receive the installment before 3 pm on the 5th to be eligible for the NAV declared on the 5th.
- Bank Realisation Is Key: Even if you place an order before the cut-off, if the funds aren’t received by the AMC before the cut-off, you’ll get the next day’s NAV.
Global Cut-Off Times for Mutual Funds
Mutual funds in different countries have different cut-off times. For example, in the United States, many mutual fund prices are based on 4:00 p.m. Eastern Time, meaning orders placed before that (or with the proper cut-off) get that day’s NAV.
Best Practices for Investors
Some steps that you can take to ensure the best practices include:
- Plan early: Always try to submit purchase or redemption requests before the prescribed cut-off time.
- Go through the cut-off schedule: Check out the different cut-off times and schedules related to each category of fund.
- Official platforms: Use only official platforms to transact in mutual funds so as to avoid unnecessary delays.
- Keep a track: Once the transaction is made, keep track of it to ensure timely updates.
Conclusion
Cut-off time in mutual funds is crucial to ensure that you can take advantage of the prevailing NAV and not suffer any price differentials. Ensure that you go through the cut-off schedule to meet the required timelines.
FAQs
Cut-off time is the deadline set by SEBI that determines which day’s NAV (Net Asset Value) will apply to your mutual fund transaction, whether you’re investing, redeeming, or switching units.
If you miss the cut-off time, your transaction is processed on the next business day, and the following day’s NAV is applied instead of the same-day NAV.
No, cut-off times differ based on the type of mutual fund. Equity and debt funds usually have a 3:00 p.m. cut-off, while liquid and overnight funds follow a 1:30 p.m. or 2:30 p.m. deadline.
For liquid funds, the cut-off time is generally 1:30 p.m. for purchase and 3:00 p.m. for redemption. Transactions after these times get the next business day’s NAV.
Yes, SIPs follow the same NAV cut-off rules. However, since SIPs are automated, the fund house ensures the investment amount is processed according to the applicable cut-off on the SIP date.
SEBI mandates specific cut-off times for all mutual fund categories to ensure fair NAV allocation. It also requires fund realization before the cut-off for the same-day NAV to apply.
Yes, you can get same-day NAV if your UPI or net banking payment reaches the AMC before the cut-off time. Delayed fund transfers result in next-day NAV applicability.
