How to switch a mutual fund on Coin

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A fund switch on Zerodha Coin allows you to move your investment from one mutual fund scheme to another without first receiving the redemption proceeds in your bank account. On Coin, switches are limited to schemes within the same Asset Management Company (AMC). This guide covers the complete switch process, the regulatory basis for the switch mechanism, and the tax consequences.

Prerequisites

  • An active Zerodha trading and demat account with complete KYC.
  • Mutual fund units already held in the source scheme in your Coin portfolio.
  • CDSL TPIN set up, or access to your CDSL-registered mobile for OTP authorisation.
  • TOTP authenticator for Zerodha two-factor login.

What is a fund switch: regulatory context

Under the SEBI (Mutual Funds) Regulations, 1996, a switch is treated as a simultaneous redemption from the source scheme and a fresh purchase into the destination scheme of the same AMC. Because both schemes belong to the same AMC, the AMC processes the internal transfer without the investor having to receive and reinvest cash. The switch is not available across AMCs on Coin; to move between different AMCs, you must redeem from one and separately purchase in the other.

Key SEBI and AMFI rules governing switches:

  • The NAV applicable to the source (redemption leg) and the destination (purchase leg) are determined separately based on the cut-off time rules applicable to each scheme’s category.
  • Exit loads on the source scheme apply, as if it were a redemption.
  • Fresh purchase rules (minimum investment amount, lock-in periods) apply to the destination scheme.
  • ELSS (Equity Linked Savings Scheme) units can only be switched after the 3-year lock-in period.

Step-by-step procedure

Step 1: Log in to Coin

Navigate to coin.zerodha.com or open the Coin mobile app. Enter your Zerodha client ID, password, and TOTP to log in.

Step 2: Review your Holdings

Go to Portfolio > Holdings. This page lists all mutual fund schemes in which you hold units. Identify the source scheme (the one you want to move out of) and note the AMC name, as the destination scheme must belong to the same AMC.

Step 3: Open the source scheme’s detail page

Click the source scheme’s name to open its fund detail page. Review:

  • Units held and current NAV
  • Exit load schedule (particularly if you are within the exit load period)
  • Unrealised gain or loss (relevant for tax planning)

Step 4: Initiate the switch

Click the Switch button on the fund detail page. A switch configuration drawer opens.

Switch all units: Select this option to switch the entire holding.

Switch partial amount: Enter a rupee amount or a specific number of units. Note any minimum redemption requirements for the source scheme.

Step 5: Select the destination scheme

After entering the switch amount, Coin prompts you to select the destination scheme. The list is filtered to show only schemes of the same AMC as the source scheme. Browse or search for the target scheme by name or category.

Before confirming the destination, verify:

  • The destination scheme is a direct plan (all schemes on Coin are direct, but confirm the plan name includes “Direct”).
  • The minimum investment amount of the destination scheme is met by your switch amount.
  • The destination scheme is not an ELSS if you want liquidity, or is ELSS if you want the Section 80C deduction.

Step 6: CDSL TPIN or OTP authorisation

Because the source scheme’s units are in your CDSL demat account, the switch requires a demat debit authorisation, exactly as in a redemption.

Coin redirects to CDSL’s EASIEST portal or shows an OTP prompt:

  • TPIN: Enter your 6-digit CDSL TPIN to authorise the unit debit.
  • OTP: If TPIN is not set, request an OTP from CDSL, which is sent to your CDSL-registered mobile number.

Step 7: Review and confirm

A summary screen displays:

  • Source scheme name, units/amount being switched, and applicable exit load (if any)
  • Destination scheme name and estimated units to be allotted
  • Approximate NAV for each leg (exact NAV determined at cut-off time)
  • Estimated settlement date

Click Confirm. Coin submits the switch order to the AMC via the BSE StAR MF platform.

Step 8: Verify destination units

After the switch is processed (typically T+1 to T+2 business days), the units in the source scheme are debited and new units appear in the destination scheme under Portfolio > Holdings in Coin.

The switch has two NAV legs:

  • Redemption leg (source scheme): The NAV applicable to the cut-off time of the source scheme’s category applies. For an equity fund, this is the same-day NAV if the switch is placed before 3 PM IST.
  • Purchase leg (destination scheme): The NAV applicable to the cut-off time of the destination scheme’s category applies on the same business day (if the order is placed before cut-off).

If the two schemes have different cut-off categories (for example, switching from an equity fund to a liquid fund), the applicable NAVs are determined by the respective scheme-category rules.

Exit loads on switches

Exit loads charged on the source (redemption) leg are the same as those applicable to a standard redemption. Most equity funds charge 1% for redemptions within 12 months of purchase. Overnight and most liquid funds have no exit load. Check the source fund’s exit load schedule in its SID before switching.

Tax treatment of a switch

A switch is a taxable event. The redemption leg is treated as a capital gains event on the source scheme:

  • Equity-oriented source funds: STCG at 20% (holding under 12 months); LTCG at 12.5% on gains above Rs 1.25 lakh (holding 12 months or more), per Finance Act 2024 (effective 23 July 2024).
  • Debt-oriented source funds (units purchased on or after 1 April 2023): Gains taxed at slab rates as STCG, per Finance Act 2023.

The fresh purchase in the destination scheme starts a new holding period for capital gains purposes. See capital gains tax in India for the full framework.

The purchase leg in the destination scheme is treated as a fresh investment and begins a new holding period.

What can go wrong

Same-AMC restriction: Coin does not support cross-AMC switches. To move between different AMCs, redeem from the source scheme and make a fresh purchase in the destination AMC.

ELSS lock-in: ELSS units cannot be switched within the 3-year lock-in period. Each SIP instalment in an ELSS has a separate 3-year lock-in from the date of that instalment.

Destination scheme minimum not met: If the switch amount is below the destination scheme’s minimum purchase amount, the switch will be rejected.

NAV difference between legs: If the source and destination schemes have different cut-off times (e.g., equity to liquid), the NAVs on each leg may be from different dates.

CDSL TPIN/OTP issues: As with redemptions, a forgotten TPIN or OTP sent to a stale mobile number will block the switch. Resolve CDSL TPIN access before initiating.

Switch vs. STP (Systematic Transfer Plan)

A switch is a one-time transaction. A Systematic Transfer Plan (STP) automates periodic switches of a fixed amount from one scheme to another within the same AMC at a set frequency. Coin supports STPs for AMCs that have enabled the feature. For information on setting up an STP, refer to Zerodha Coin support documentation.

References

  1. SEBI (Mutual Funds) Regulations, 1996, as amended.
  2. SEBI Master Circular for Mutual Funds (latest version on sebi.gov.in).
  3. AMFI Guidelines on mutual fund switch transactions (amfiindia.com).
  4. Finance Act 2023 – Debt mutual fund taxation amendment.
  5. Finance Act 2024 – Revised LTCG/STCG rates, effective 23 July 2024.
  6. Income Tax Act, 1961, Sections 111A and 112A.
  7. Zerodha Coin support documentation (support.zerodha.com).

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WebNotes Editorial Team

The WebNotes Editorial Team covers Indian capital markets, payments infrastructure and retail investor procedures. Every article is fact-checked against primary sources, principally SEBI circulars and master directions, NPCI specifications and the official support documentation published by the intermediary in question. Drafts go through a second-pair-of-eyes review and a separate compliance read before publication, and revisions are tracked against the SEBI and NPCI rule changes referenced in the methodology section.

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