Switching from regular to direct plan

I have subscribed to ICICI Prudential Child Care Plan - Study Plan (Regular) on my demat account with ICICI Securities. I have paid three Systematic Investment Plan (SIP) instalments. I want to switch from the regular to the direct plan. Is it possible?
- Bharat Sharma

You cannot invest in a direct plan through an intermediary like ICICI Securities. You have to invest directly with a mutual fund (offline or online) to invest in a direct plan. However, you will have to take into account the exit load and capital gains taxes before finalising the switch from the regular plan to a direct plan. A switch is a redemption on the existing regular fund and a purchase in the direct plan and it attracts applicable exit load and capital gains taxes. ICICI Prudential Child Care Plan - Study Plan charges an exit load of 3 per cent on the first year, 2 per cent for redemption within 730 days, and 1 per cent for redemption between 731 and 1095 days. Also, as a debt-oriented hybrid scheme it will attract short-term capital gains tax if you sell it before three years. Short-term capital gains are added to the income and taxed as per the Income Tax slab applicable to the investor. If the investment is small, you may go ahead with your decision to switch. Otherwise, you can stop the existing SIP and start a new SIP in a direct plan.

For more information, read: All About Going Direct.

This article was originally published on February 10, 2016.