Should I pay tax if I switch from one scheme to another in mutual Fund?

POSTED BY Krishna ON March 27, 2014 9:08 pm COMMENTS (3)


Do I need to pay tax if i switch from a scheme to Direct if I have HDFC top 200 purchased thru Broker, Do I need to pay tax If i switch the units to Direct Scheme if the units are held less than one year ?




3 replies on this article “Should I pay tax if I switch from one scheme to another in mutual Fund?”

  1. Krishna says:

    Hi Ashal/Hemanth,

    Thanks a lot for clearing my doubt , I stopped idea of switching for now, hence forth I will continue to invest in MF via direct way only.


  2. ashalanshu says:

    Dear Krishna, Yes is the answer. As redemption within 1Y ‘ll invite STCG Tax on regular plan units.



  3. Hemanth Chandra says:

    When you switch from one fund to another or from ‘growth’ to ‘direct’ of the same fund, it will be considered as redemption and new purchase.

    So, if you get some profit your investment you have to consider it as capital gains for the financial year and tax is to be paid accordingly.

    In your case, as you have held is less than an year, you have to pay STCG tax.

    Also, as you are switching before an year, exit load ( generally 1%) will be applicable. So, request you to check it before you switch. If the invested amount is big and if 1 year completion of investment is nearby, better wait for completion of 1 year, because exit load and LTCG will not be there if you switch as HDFC Top 200 is an equity fund.

    Let me know in case of any clarification.


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