Equity Mutual Funds - Switching to Direct Plan

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Hi Pankaj,

With the recent introduction of Direct Plan for Mutual Funds, if I am to switch my units from existing plan to a Direct Plan, what are the likely tax implications.

Thanks in advance

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1 Answers

If earlier investments were done through a distributor (with a distributor code on application), any Switch of Units from Existing Plan to Direct Plan of a Scheme/Plan shall be subject to applicable exit load, if any. In such cases, after the switch, exit load under the Scheme prevailing on the date of the switch shall apply for subsequent redemption/switch-out from Direct Plan.

Where investments were made directly i.e. without any distributor code, Exit load will not be levied on switch of Units from Existing Plan to Direct Plan of that Scheme/Plan.

Also please note that STT (Securities transaction tax) may also be levied on equity mutual funds on switch.

Pankaj Batra5212
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