NISM-Series-V-A: Mutual Fund Distributors · Net Asset Value, Total Expense Ratio and Pricing of Units

Mutual Fund Cut-off Time and Applicable NAV Rules

Updated 11 October 2026 · Fact-checked

Cut-off time is the deadline by which a valid application and cleared funds must reach the fund to get that day's NAV. Most schemes use 3:00 pm. Liquid and overnight purchases use 1:30 pm and get the previous day's NAV. Stamp duty of 0.005% applies on unit purchases, not redemptions.

Understand Cut-off Time, Applicable NAV and Stamp Duty

Mutual fund units are not priced all day like shares. The fund declares one NAV per business day, after the market closes. So the fund needs a rule to decide which day's NAV your transaction gets. That rule is the cut-off time.

The logic is simple. If your valid application arrives before the cut-off, you get that day's NAV. If it arrives after, you wait for the next business day's NAV. A non-business day is treated like after cut-off, so the next business day's NAV applies. SEBI fixed these rules so no investor can use a NAV that is already known at the time of dealing.

For purchases, two things matter: when the application is received, and when the money is available for use by the fund. For most schemes, you get the NAV of the day funds are available for utilisation, provided the application is received before 3:00 pm. The funds must be cleared by the cut-off on that day.

Liquid and overnight funds are different. They invest for very short periods, so the fund should not earn or pay for a day it did not hold your money. For a purchase received up to 1:30 pm with funds available before the cut-off, the NAV applied is that of the day immediately before the day of receipt. For redemptions, liquid funds use the 3:00 pm cut-off and the NAV of the day of receipt.

Stamp duty is a separate cost. Since 1 July 2020, stamp duty of 0.005% is charged on the purchase of mutual fund units. It covers lump sum purchases, SIPs, STPs and switch-ins, and reinvestment of IDCW. Units are allotted against the amount left after deducting stamp duty. It is not charged on redemptions.

Key formulas to remember

Cut-off for most schemes (purchase and redemption): Valid application before 3:00 pm → NAV of that day; after 3:00 pm → next business day's NAV; For purchases, funds must also be available for utilisation before the cut-off. Applies to equity, debt and similar schemes other than liquid and overnight for purchases.
Purchase in liquid and overnight funds: Application up to 1:30 pm and funds available before cut-off → NAV of the day immediately preceding the day of receipt; After 1:30 pm, a later day applies. Remember this is the previous day's NAV, not the same day's.
Redemption in liquid funds: Application before 3:00 pm → closing NAV of the day of receipt; after 3:00 pm → next business day's NAV; Redemption cut-off is 3:00 pm, unlike the 1:30 pm purchase cut-off.
Stamp duty on purchase of units: Stamp duty = 0.005% × purchase amount; Charged on purchases, including SIP, STP, switch-in and IDCW reinvestment. Not on redemption.
Units allotted after stamp duty: Units = (Amount invested − Stamp duty) ÷ Applicable NAV; Stamp duty is deducted before allotment, so units are based on the net amount.

How to solve Cut-off Time, Applicable NAV and Stamp Duty questions

Use this order for any cut-off or applicable NAV question. Do not jump to the NAV before you finish step 3.

1Identify the transaction: purchase, redemption, switch or SIP instalment.
2Identify the scheme type: liquid or overnight fund, or any other scheme.
3Note the time the valid application was received and whether the day is a business day.
4For a purchase, check when the funds were available for utilisation. Both application and funds must meet the cut-off.
5Apply the rule: 3:00 pm for most cases, 1:30 pm for liquid and overnight purchases (previous day's NAV).
6If the application is late or the day is a holiday, move to the next business day.
7For stamp duty, deduct 0.005% from a purchase amount and divide the rest by the NAV.
8Match your result to the options and discard any option that uses the wrong day.

Quickest way: Two clocks, one question

When to use it: Use when the question gives a time and asks which day's NAV applies.

Ask first: is it a liquid or overnight fund purchase? If yes, the clock is 1:30 pm and the NAV is the previous day's.
Otherwise the clock is 3:00 pm. Before it, same day's NAV; after it, next business day's NAV.
Check weekends and holidays. They always push the NAV to the next business day.
For stamp duty questions, take 0.005% off purchases only, then divide by NAV.

Common mistakes in Cut-off Time, Applicable NAV and Stamp Duty

Giving a liquid fund purchase the same-day NAV.
Students apply the normal 3:00 pm rule to every scheme.
Fix: For liquid and overnight purchases received by 1:30 pm with funds available, use the previous day's NAV.
Using 3:00 pm as the cut-off for liquid fund purchases.
3:00 pm is the most familiar cut-off, and liquid redemptions also use it.
Fix: Remember purchases 1:30 pm, redemptions 3:00 pm for liquid funds.
Ignoring when funds are available for a purchase.
Students look only at the application time.
Fix: The NAV follows the day funds are available for utilisation, and the application must also be on time. Late funds mean a later NAV.
Charging stamp duty on redemptions.
Students link all transaction costs to both buying and selling.
Fix: Stamp duty applies to purchases only (including switch-in, SIP, STP and IDCW reinvestment).
Dividing the full amount by NAV to get units.
Students forget that stamp duty is deducted before allotment.
Fix: Subtract 0.005% first, then divide the net amount by the applicable NAV.
Treating a holiday application as same-day.
The time looks like it is before the cut-off.
Fix: The NAV is declared only for business days, so a holiday application gets the next business day's NAV.

Worked examples

Example 1

An investor applies for ₹50,000 of units in an equity scheme at 2:45 pm on a Tuesday. The funds are available for utilisation the same day before the cut-off. Tuesday's NAV is ₹20 and Wednesday's is ₹21. Stamp duty is 0.005%. How many units are allotted?

Show the solution

The scheme is not liquid or overnight, so the cut-off is 3:00 pm.
The application (2:45 pm) and funds are both on time, so Tuesday's NAV of ₹20 applies.
Stamp duty = 0.005% × ₹50,000 = ₹2.50.
Net amount = ₹50,000 − ₹2.50 = ₹49,997.50.
Units = ₹49,997.50 ÷ ₹20 = 2,499.875.

Answer: 2,499.875 units at a NAV of ₹20.

Example 2

A valid application to buy units of a liquid fund is received at 11:00 am on Wednesday, and the funds are available for utilisation before the cut-off the same day. Which NAV applies? (A) Monday's NAV (B) Tuesday's NAV (C) Wednesday's NAV (D) Thursday's NAV. Assume all are business days.

Show the solution

The scheme is a liquid fund, so the purchase cut-off is 1:30 pm.
11:00 am is before 1:30 pm and funds are available in time.
The rule gives the NAV of the day immediately preceding the day of receipt.
The day of receipt is Wednesday, so the preceding day is Tuesday.

Answer: (B) Tuesday's NAV.

Exam tips

Expect a time-based question that asks which day's NAV applies. Check scheme type first.
Learn the liquid fund pair by heart: purchase 1:30 pm with previous day's NAV, redemption 3:00 pm with same day's NAV.
Watch for weekends and holidays in the question. They move the NAV to the next business day.
For stamp duty, remember 0.005% on purchases only. Options often add a charge on redemption as a trap.
Wrong answers can cost marks in some NISM series. Only answer if you are sure about the cut-off pair.

Practice questions from Net Asset Value, Total Expense Ratio and Pricing of Units

Cut-off Time, Applicable NAV and Stamp Duty: frequently asked questions

What is the cut-off time for mutual funds?

For most schemes it is 3:00 pm, for both purchases and redemptions. Liquid and overnight funds use 1:30 pm for purchases. Applications received before the cut-off get that day's NAV, subject to the funds rule for purchases.

Which NAV applies to a liquid fund purchase?

If the application is received up to 1:30 pm and funds are available for utilisation before the cut-off, the NAV of the day immediately preceding the day of receipt applies. Later applications get a later day's NAV.

Is stamp duty charged on mutual fund redemption?

No. Stamp duty of 0.005% is charged on unit purchases, including SIPs, STPs, switch-ins and IDCW reinvestment. Redemptions carry no stamp duty.

What if I apply on a holiday?

NAV is declared only on business days. An application made on a non-business day is treated as received on the next business day and gets that day's NAV, subject to the cut-off.