Mutual funds on Zerodha (Coin)

Coin is Zerodha’s mutual fund investment platform, operated as part of the Zerodha product suite. Launched in 2017, Coin allows investors to buy and sell direct-plan mutual fund units without paying any distributor commission. All units purchased through Coin are held in the investor’s demat account at CDSL rather than in a foliostatement form with the Asset Management Company (AMC). Coin is accessible through the Coin mobile application, the Coin website (coin.zerodha.com), and from within Kite’s sidebar.

As of 2025, Coin hosts investments across approximately 40 AMCs and over 2,000 mutual fund schemes including equity funds, debt funds, hybrid funds, index funds, and exchange-traded funds (ETFs).

Regulatory framework

SEBI oversight

Mutual funds in India are regulated under the SEBI (Mutual Funds) Regulations, 1996, as amended. AMCs are registered with SEBI and must comply with investment restrictions, disclosure requirements, and scheme categorisation norms defined in SEBI’s Master Circular on Mutual Funds.

SEBI’s circular SEBI/IMD/DF/21/2012 introduced the Direct Plan mandate, requiring every mutual fund scheme to offer a direct plan (without distributor commission) from 1 January 2013. The expense ratio of direct plans is lower than regular plans by the amount of the distributor trail commission, which typically ranges from 0.5% to 1.5% per annum depending on the fund category.

Coin’s regulatory status

Coin operates as a registered investment adviser (RIA) or as a mutual fund transaction platform depending on the transaction type. Zerodha Broking Limited holds the AMFI Registration Number (ARN) but operates Coin on a zero-commission, direct-plan-only basis, distinguishing it from commission-earning distributors.

Transactions through Coin are processed through the BSE StAR MF platform (BSE’s mutual fund transaction platform) or the NSE NMF-II platform, both of which are SEBI-approved infrastructure entities for mutual fund distribution.

How Coin holds mutual fund units

Units purchased through Coin are held in demat form in the investor’s CDSL demat account, unlike units bought directly through an AMC or a regular distributor, which are held in a folio with the Registrar and Transfer Agent (RTA) (CAMS or KFintech).

Holding units in demat form has the following implications:

• Units appear in the CDSL statement (Consolidated Account Statement for demat-held units).
• Units can be pledged as collateral margin for trading, see pledge and collateral margin on Zerodha .
• Transfer of units between demat accounts is possible (unlike folio-based units which require AMC-specific processes).
• Annual maintenance charge (AMC for the demat account, charged by CDSL and passed through to the client) applies. Zerodha charges Rs 300 per year for the first Rs 50,000 of portfolio value and Rs 150 per year additional for every Rs 50,000 increment, subject to a maximum. Clients must verify the current fee schedule on Zerodha’s website.

Direct vs regular plans

Coin exclusively offers direct plans. The difference in expense ratio between direct and regular plans compounds significantly over long holding periods:

For a fund with a total expense ratio (TER) of 1.8% (regular) vs 0.9% (direct) on an investment of Rs 10,00,000 over 20 years at a gross return of 12% per annum:

• Regular plan: Terminal value approximately Rs 78 lakh.
• Direct plan: Terminal value approximately Rs 97 lakh.

The difference (Rs 19 lakh) represents the cumulative distributor commission saved over 20 years. These figures are illustrative; actual TER and returns vary by scheme.

SIP mechanics

Systematic Investment Plans (SIPs) on Coin are set up using the NACH (National Automated Clearing House) mandate system. Coin supports both NACH-based mandates and UPI-based SIPs.

NACH mandate

An NACH mandate authorises NPCI to debit the investor’s bank account on a specified date each month. The mandate is registered with the investor’s bank and remains active until cancelled. Registration of an NACH mandate typically takes 7 to 10 working days. Once registered, SIP instalments are processed automatically on the SIP date.

Coin allows SIP dates of 1st, 7th, 14th, and 28th of each month. If the SIP date falls on a market holiday or weekend, the debit occurs on the next working day.

UPI mandate (UPI AutoPay)

UPI AutoPay, introduced by NPCI under the UPI 2.0 framework, allows recurring mandates without a paper NACH form. Coin supports UPI mandates for SIPs up to Rs 1,00,000 per instalment. UPI mandates are activated immediately and do not require the 7-10 day registration period of NACH.

NPCI’s specification for UPI AutoPay governs the mandate workflow: the investor creates a mandate on the Coin app, approves it on the bank’s UPI application, and recurring debits are processed by NPCI on each SIP date.

SIP pause and cancellation

Investors can pause a SIP for up to three months at a time through the Coin interface. A paused SIP resumes automatically after the pause period. Cancellation of a SIP requires at least 7 working days’ notice before the next instalment date to ensure the NACH/UPI mandate is deactivated in time.

Lump-sum investments

In addition to SIPs, Coin supports lump-sum purchases using:

• UPI (immediate payment).
• Net banking.
• NEFT/RTGS.

Lump-sum investments are allotted at the applicable day’s NAV, subject to the cut-off time rule: investments received and funds cleared by 15:00 IST on a business day receive that day’s NAV; investments after 15:00 IST receive the next business day’s NAV.

NAV allotment and cut-off time rules

SEBI’s cut-off time framework (Circular SEBI/IMD/CIR No. 11/142521/08, as revised) governs NAV applicability:

• Equity funds: Same-day NAV if application and funds are received by 15:00 IST.
• Debt funds (less than Rs 2 lakh): Same-day NAV if application received by 15:00 IST.
• Debt funds (Rs 2 lakh and above): NAV of the day on which funds are credited to the AMC’s bank account (realisation-based).

Coin uses payment methods that generally ensure same-day fund realisation for equity fund investments below Rs 2 lakh made before 15:00 IST.

Redemption process

Redemption of mutual fund units through Coin works as follows:

1. Investor places a redemption request on Coin specifying the number of units or the redemption amount.
2. Coin routes the request to the BSE StAR MF or NSE NMF-II platform.
3. The AMC processes the redemption at the applicable NAV (cut-off times as above).
4. For demat-held units, the units are debited from the CDSL demat account.
5. Redemption proceeds are credited to the investor’s bank account registered with the demat account.

Standard redemption timelines:

• Equity funds: T+3 working days (by SEBI mandate, subject to upgrade to T+2).
• Debt/liquid funds: T+1 or T+2 working days depending on scheme category.
• Liquid funds: T+1 (some schemes offer instant redemption up to Rs 50,000 or 90% of portfolio value per day, whichever is lower, through the instant redemption facility).

Fund categories available

Coin offers all SEBI-defined fund categories under the SEBI (Mutual Funds) Regulations:

• Equity funds: Large cap, mid cap, small cap, flexi cap, multi cap, sectoral, thematic, ELSS, index funds.
• Debt funds: Liquid, overnight, ultra short duration, short duration, corporate bond, gilt.
• Hybrid funds: Balanced advantage, aggressive hybrid, arbitrage, equity savings.
• Solution-oriented funds: Retirement funds, children’s funds.
• Other: International funds of funds, gold ETF fund of funds.

Index funds tracking the Nifty 50, Nifty Next 50, Nifty Midcap 150, and Sensex are among the most popular on Coin due to their very low expense ratios (0.1% to 0.2%).

Tax treatment

Equity-oriented mutual funds

Equity-oriented funds (minimum 65% equity allocation) have the following tax treatment:

• Short-term capital gains (STCG): Units held less than 12 months; taxed at 15% under Section 111A.
• Long-term capital gains (LTCG): Units held 12 months or more; taxed at 10% on gains exceeding Rs 1 lakh per year under Section 112A.

Debt-oriented mutual funds

Following the Finance Act, 2023, which removed the indexation benefit for debt fund gains:

• All gains from debt mutual fund units purchased on or after 1 April 2023 are taxed as short-term capital gains, irrespective of holding period, at the applicable income tax slab rate.
• Units purchased before 1 April 2023 retain the old three-year LTCG with indexation treatment (grandfathered).

ELSS (Equity Linked Savings Scheme)

ELSS investments qualify for deduction up to Rs 1,50,000 per year under Section 80C of the Income Tax Act. The mandatory lock-in period is three years. ELSS is an equity-oriented fund; LTCG tax at 10% applies on gains after three years.

Dividend taxation

Dividends from mutual funds are taxable in the hands of the investor at the applicable slab rate. TDS at 10% applies for dividends exceeding Rs 5,000 per year per AMC.

Coin vs other platforms

The demat-based holding on Coin is both its differentiator (pledgeability for margin) and a limitation: consolidation of mutual fund statements across folios and demat accounts is less straightforward than using a single RTA account.

Common operational considerations

AMC cut-off and pending orders

Orders placed close to the 15:00 IST cut-off may be processed at the next day’s NAV if payment processing encounters delays. Coin advises placing orders before 14:30 IST to provide buffer time.

Demat account mandatory

Coin requires an active Zerodha demat account (CDSL). Investors who only want a trading account without a demat account cannot use Coin. This is unlike RTA-based platforms where mutual fund investment does not require a demat account.

NPS integration

Zerodha’s Coin platform also offers access to the National Pension System (NPS). See the NPS on Coin article for details on the NPS workflow, contribution mechanics, and tax deductions under Section 80CCD.

References

1. SEBI (Mutual Funds) Regulations, 1996.
2. SEBI Circular SEBI/IMD/DF/21/2012, Direct Plan introduction.
3. SEBI Circular SEBI/IMD/CIR No. 11/142521/08, Cut-off time framework for NAV applicability.
4. SEBI Master Circular on Mutual Funds (current year).
5. Finance Act, 2023, Debt mutual fund taxation amendment.
6. Income Tax Act, 1961, Sections 80C, 80CCD, 111A, 112A.
7. NPCI, UPI AutoPay (UPI 2.0) specification.