Cut-Off Time and Applicable NAV

What Is Cut-Off Time and Applicable NAV?

Mutual fund units are priced only once a day, at the closing Net Asset Value (NAV) calculated after the market closes. Because thousands of investors transact throughout the day, SEBI prescribes a uniform rule to decide which day's NAV each transaction gets.

• Cut-off time is the outer time limit within a business day that determines the NAV applicable to your transaction. SEBI's Master Circular for Mutual Funds defines it in exactly these terms.
• Applicable NAV is the NAV at which your purchase, redemption or switch is actually processed, based on the cut-off rules.

You meet these rules every time you invest a lump sum, run a SIP, redeem or switch. They decide how many units you get when you invest and how much money you receive when you redeem. For a focused explanation of the price itself, see Applicable NAV.

How Does It Work?

Three things decide your applicable NAV:

1. Scheme type: liquid and overnight funds follow different rules from all other schemes.
2. Transaction type: purchase (including switch-in) or sale (redemption, including switch-out).
3. Timing: the time-stamp of your application at an official point of acceptance and, for purchases, the time your money is credited to the scheme's bank account and available for use.

Purchases and switch-ins

As per SEBI's current Master Circular for Mutual Funds (20 March 2026):

In simple terms, for most schemes both your application and your money must reach the fund before 3:00 pm to get that day's NAV. Funds must be available without the scheme using any credit facility. AMFI notes that this "realisation of funds" rule has applied to all purchases, regardless of amount, since 1 February 2021.

Redemptions and switch-outs

For redemptions, the time-stamp of a valid request matters; there is no "funds" condition.

Other points to know

• A business day excludes days on which money markets are closed or not accessible.
• Cut-off times apply to the time an application is time-stamped at an official point of acceptance, or recorded on an online platform.
• In a switch, the switch-in amount equals the switch-out redemption payout, and the switch-in follows purchase rules. See Switch Transaction.
• SEBI's uniform cut-off rules do not apply to international schemes and to transactions in mutual fund units undertaken on a recognised stock exchange; check the SID for those.
• AMCs must ensure investors' money is credited to the scheme's bank account expeditiously and must compensate investors for losses caused by non-compliance.

Practical Example (Illustrative)

Suresh invests ₹50,000 in an equity scheme. He submits his application at 1:00 pm on a Thursday. The NAVs are hypothetical, and stamp duty is ignored.

Calculations: ₹50,000 ÷ 25.00 = 2,000; ₹50,000 ÷ 25.40 = 1,968.504; ₹50,000 ÷ 24.80 = 2,016.129.

The application time was the same in all three cases. Only the time the money arrived changed the NAV. Note that in scenario C he got more units, simply because the hypothetical NAV fell; a delay can work either way.

Redemption example: Suresh redeems units of the same scheme with a request time-stamped at 3:20 pm on Tuesday. Because it is after 3:00 pm, he gets Wednesday's closing NAV.

SIP example: AMFI explains that a SIP instalment debited on the 10th gets the 10th's NAV only if the money reaches the mutual fund before 3:00 pm that day; otherwise, it gets the NAV of the next business day on which funds are available before the cut-off.

Why Is It Important?

• Decides your units and redemption value, which directly affect returns.
• Shows why payment mode matters: AMFI's illustration of settlement shows that UPI, net banking, NEFT, RTGS, NACH and cheque payments reach the fund at different times, which can shift allotment by one or more days.
• Protects existing investors from late investors trading on known information at a stale price.
• Helps you plan large investments or redemptions around market events and holidays.

Key Features

Benefits and Limitations

Practical usefulness

• Uniform, transparent rules apply to every investor and AMC.
• Purchases are always at a future (unknown) NAV for most schemes, which prevents unfair gains from late trading.

Limitations and pitfalls

• You cannot know the exact NAV when you transact.
• Bank or payment delays can shift the NAV even when you apply on time.
• Holidays and weekends can push both purchases and redemptions to a later NAV.

Comparison With Related Concepts

How Does It Apply to Mutual Fund Investors?

• Lump sum purchases: Pay through a fast mode early on a business day if you want that day's NAV. See Lump Sum Investment.
• SIPs: The SIP debit date and the allotment date can differ by a day, depending on the mandate type and bank processing. See SIP Due Date.
• Redemptions: Submit before 3:00 pm for same-day NAV in most schemes.
• Liquid funds: The 1:30 pm purchase cut-off and "previous day NAV" rule make them useful for short-term parking, but plan the timing.
• Statements: Your Mutual Fund Transaction Confirmation shows the NAV date used.

Common Mistakes and Misconceptions

1. "I placed the order before 3 pm, so I'll get today's NAV." For purchases in most schemes, the money must also be available to the scheme by 3:00 pm. Order time alone is not enough.
2. "The NAV on my app is the price I'll get." The NAV shown during the day is usually the previous day's. Your transaction uses a closing NAV declared later.
3. "Redemptions also depend on funds realisation." Redemptions depend only on the time-stamp of a valid request.
4. "Weekends don't matter." A request on a non-business day gets the next business day's NAV for most schemes.
5. "All schemes follow 3 pm." Liquid and overnight funds have a 1:30 pm purchase cut-off, overnight funds accept online redemptions until 7:00 pm, and international schemes may differ.

Important Terms to Know

• Applicable NAV: The NAV used to process your transaction.
• Mutual Fund Cut-Off Timings: The daily deadlines in more detail.
• Net Asset Value (NAV): The per-unit value of a scheme.
• Liquid Funds: Debt schemes with a 1:30 pm purchase cut-off.
• Overnight Funds: Schemes investing in one-day instruments, with special cut-off rules.
• Allotment of Units: The crediting of units after the NAV is applied.
• Purchase Transaction: Any request to buy units.

Key Takeaways

• Cut-off time decides which day's NAV applies; the applicable NAV is the price you get.
• For most schemes, purchases need funds available to the scheme by 3:00 pm; redemptions need a valid request by 3:00 pm.
• Liquid and overnight funds have a 1:30 pm purchase cut-off, and overnight funds allow online redemptions until 7:00 pm.
• Payment mode and bank processing can shift your purchase NAV.
• Check your transaction confirmation for the NAV date actually applied.

Related Glossary Terms

• Applicable NAV
• Mutual Fund Cut-Off Timings
• Allotment of Units
• Redemption
• Switch Transaction
• Liquid Funds
• SIP Due Date

References

• SEBI, Master Circular for Mutual Funds (20 March 2026), guidelines for cut-off timings
• AMFI, Uniformity in applicability of NAV (examples and payment-mode settlement table)
• SEBI circular on mutual funds dated 17 September 2020 (realisation of funds for applicable NAV)
• SEBI, FAQs for Mutual Fund Investors

Educational Disclaimer

This page is published by FynnChintan Finserv, an AMFI-registered mutual fund distributor, for educational and informational purposes only. It is not personalised investment, tax or legal advice, and FynnChintan Finserv is not a SEBI-registered investment adviser. Rules, timelines and tax provisions can change, and many features described here are scheme-specific. Before investing, read the Scheme Information Document (SID), Statement of Additional Information (SAI) and Key Information Memorandum (KIM), and consider your financial goals, risk profile and investment horizon. For tax matters, refer to the latest Income Tax rules or consult a qualified tax adviser. Mutual fund investments are subject to market risks; read all scheme-related documents carefully.

Want to see how timing affects every transaction? Explore our glossary pages on Applicable NAV and Allotment of Units. FynnChintan Finserv: Beyond Numbers. Into Opportunities.