Bi-Weekly Advice Thread May 09, 2021: All Your Personal Queries

I believe the only way to switch is to sell them units of regular plan and buy equivalent units of the direct plan.

  1. Most mutual funds have an exit load of 1% if sold within 1 year. So you won’t have any charges on the units you bought in the first 4 years, but for units bought in the last 1 year, you’ll might have to pay 1% exit load. Check the mutual fund for how long they charge the exit load.

  2. Any units you bought more than a year ago will fall under LTCG. LTCG has an exemption of up to 1L, so let’s your total returns is 1.5L, then you’ll have to pay taxes only the 50K. The tax rate is 10%, so total tax will be 5K on 1.5L returns.

Any returns from units bought within the last 1 year will fall under STCG. I don’t think there are any strategies so save the LTCG or STCG.

  1. You’ll have to stop all the SIP to regular plan and start them again once you buy the direct plan units. Switching in one go or pieces doesn’t matter. The only thing that matter is whether the units were bought more than 1 year ago or not (for LTCG and exit loads).
/r/IndiaInvestments Thread Parent