Regular to Direct on WebNotes

How to switch from regular plan to direct plan (mutual fund)

Tue, 19 May 2026 00:00:00 +0000

The regular-to-direct switch is one of the highest-impact cost decisions for retail investors who started with distributor-channel regular plans. The TER savings over a long horizon typically exceed the immediate capital-gain tax on the switch. The optimal strategy uses phased switching across multiple FYs to use the Rs 1.25 lakh LTCG exemption each year.

Conflict-of-interest disclosure. This guide is published by WebNotes Editorial Team for informational purposes. WebNotes has no commercial relationship with any AMC, distributor, or RIA. No affiliate commission is earned. For complex multi-folio tax-cost optimisation, consult a Chartered Accountant.

MF switch as a taxable event

Tue, 12 May 2026 00:00:00 +0000

A switch in mutual funds is a taxable event under the Income Tax Act 1961. When an investor switches from one mutual fund scheme to another – or from the regular plan to the direct plan of the same scheme, or from the IDCW option to the growth option – it constitutes a “transfer” within the meaning of Section 2(47) of the Income Tax Act 1961. At the moment of the switch, units in the source scheme are deemed to have been redeemed at the prevailing switching NAV, and new units are allotted in the destination scheme at the same NAV. Capital gains (or losses) crystallise in the source scheme on the switch date, and the holding period for the new units in the destination scheme begins on the switch date.