Switching from a regular plan to a direct plan has become a common move among retail investors who want to lower costs over the long run. Since direct plans remove distributor commissions, their expense ratios are lower, which means they quietly add a little extra to your returns each year. The good news is the switch can be done entirely online today—through your fund house, through RTAs like CAMS and KFin, or through your demat or mutual fund platform. The steps are simple, but you should understand the tax and exit-load implications before making the jump.
Why investors switch to direct plans
Regular plans include ongoing commissions to distributors or platforms, which are built into the scheme’s expense ratio. Over five, ten or fifteen years, this difference compounds meaningfully. For example, even a 0.5 per cent annual expense difference can widen long-term returns by lakhs. With direct plans, you buy the same fund and portfolio, just without the commission layer. That is why many long-term SIP and lump-sum investors eventually shift their holdings to direct.
Know the tax impact before switching
A switch from regular to direct counts as a redemption followed by a fresh purchase. This means capital gains tax will apply. For equity funds, gains held for less than a year attract short-term tax; gains held longer fall under long-term tax rules. Debt funds follow slab-rate taxation based on the investor’s income. If your gains are substantial, it may be worth staggering the switch over multiple financial years. Exit loads, if still applicable, also get triggered.
Using your fund house website or app
If you prefer the most direct route, visit the AMC’s website or app where your folio is held. After logging in with PAN and OTP, choose the “switch” option. Select your current regular plan and then choose the corresponding direct plan under the same scheme. Enter the amount or units you want to switch, confirm the details and submit the request. Most AMCs complete this switch within one to three business days, and you get a fresh transaction confirmation.
Switching through CAMS or KFin
If your funds are spread across multiple AMCs, using a registrar-and-transfer agent can be easier. CAMS handles fund houses like HDFC, ICICI Prudential, SBI and others, while KFin manages houses like Mirae, Nippon and Kotak. On the CAMS or KFin portal or app, log in using PAN, authenticate with OTP and view your consolidated folios. The switch option appears alongside eligible schemes. The flow is similar: pick the regular plan, choose the direct version, and confirm the switch.
Doing it via your demat or MF platform
Some investors hold their units in demat form through brokers like Zerodha, Groww or Angel One. In such cases, the switch must be done on the platform itself, not through the AMC. Many of these platforms offer an in-app “switch to direct” option. The steps are straightforward, but processing may take slightly longer because the request travels through the brokerage’s systems before reaching the fund house.
What happens to SIPs during the switch
Switching the units does not automatically change your SIP. You must cancel the existing SIP in the regular plan and set up a fresh SIP in the direct version. Forgetting this step is one of the most common mistakes investors make, causing fresh monthly investments to continue into the regular plan by default.
When switching makes the most sense
For long-term investors with years left in their financial goals, shifting to direct can meaningfully improve net returns. If your holdings are small or recently started, the tax impact is often minimal, making the switch easy. Investors closer to their goal timelines should weigh the tax cost against the remaining tenure—sometimes waiting a few months to qualify for long-term tax status can help.
Think of it as a one-time clean-up
Once you understand the process, switching from regular to direct is a one-time exercise that simplifies your portfolio and lowers your long-term costs. Whether you use your AMC’s website, an RTA or your investing platform, the steps are predictable and can be completed in minutes. Over time, the lower expense ratio quietly adds up, making direct plans the default choice for most Indian investors who prefer transparency and control.
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