Sold mutual funds on March 31? Here's when you're taxed

Reader’s question: I submitted a 'sell' request for my mutual fund units on March 31, the last working day of the financial year. However, the payout was credited to my account in April, in the next financial year. For tax purposes, in which financial year will the capital gains be considered? Also, does the timing of my request submission matter? – Anonymous

This is a question that trips up many investors, particularly around the financial year-end.

The short answer: it's not about when you submit the request. For tax purposes, capital gains from mutual fund redemptions are recognised in the financial year in which the redemption is processed and the NAV (net asset value) is applied.

How the cut-off time works

SEBI regulations set a 3 PM cut-off for redemption requests on business days. Submit before 3 PM, and your transaction is processed at that day's NAV. Submit after 3 PM or on a non-business day and it rolls over to the next business day's NAV.

Here's a practical example: if you placed a redemption request on March 31, 2026, before 3 PM, it would be processed at that day's NAV — and your capital gains would fall in FY 2025-26. However, if you submitted the request after 3 PM, it would be processed on the next business day, April 1, 2026, pushing your capital gains into FY 2026-27.

In short, what determines your tax year isn't simply when you submitted the request; it's whether that submission beat the 3 PM cut-off and landed on a business day.

This article was originally published on March 31, 2025, and last updated on March 31, 2026.