Mutual funds have been offering separate plans for direct investments — investments not made via distributors in existing and new schemes — since January last year. This direct plan will have lower expense ratio.

Following are FAQs based on the general rules followed across all fund houses.

But some applicability may vary from fund to fund.

Will the investment already made without distributor code in the existing/regular plan be converted into the direct plan automatically?

No. It will continue to remain in the existing/regular plan. Investors desiring to bring the existing investment under direct plan may do so by submitting a switch request. The same holds true for investments made through distributors.

I have made investments partially through the distributor and partially without a distributor.

Can I convert my entire investments to direct plan?

Yes. You can do so by submitting a switch request.

Is the NAV for direct plan different from the NAV for the existing/regular plan?

Yes. NAV for direct plan is different from the NAV of regular plan based on the difference in the expense ratio of the respective schemes.

If I convert regular plan into a direct plan, will it be treated at par with redemption and switch-out and capital gains be charged?

Yes. It will entail tax consequences. However, it is advisable the investor consults a professional tax consultant before initiating such requests.

I am an NRI investor. Will TDS be deducted at the time of conversion from the existing/regular plan to direct plan?

Yes. TDS will be deducted as applicable for NRIs.

(Contributed by CAMS Viveka, an Investor Education Initiative from CAMS. Views expressed general practices in the MF industry and may vary on a case to case basis.)

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