--- title: "Direct vs Regular Mutual Fund Plans Explained | RupeeCase" description: "Direct vs regular mutual fund plans: same portfolio, different expense ratio. What SEBI's 2012 circular changed, how to read the TER, when advice pays." source_url: "https://www.rupeecase.com/guides/direct-vs-regular-mutual-fund" --- ## What is the difference between direct and regular plans? Every open ended scheme in India comes in two plans. The **regular plan** is the one you buy through a distributor: a bank, a broker, a relationship manager or an independent mutual fund distributor. The **direct plan** is the one you buy without a distributor, from the fund house's site, its app, or a platform that routes orders as direct. Regular plan ### Bought through a distributor * Same portfolio and manager * Expense ratio includes commission * Lower NAV than the direct plan * Service from the distributor, if any Direct plan ### Bought from the fund house * Same portfolio and manager * No distributor commission * Lower expense ratio, higher NAV * You make every decision yourself Tap a side or swipe across the card. Read 2 more paragraphs, 113 words Inside, they are the same fund. The money from both plans is invested in one portfolio, by one fund manager, with one objective and one asset allocation. What differs is the expense charged to each plan. The regular plan carries the commission the fund house pays the distributor; the direct plan does not. Because expenses are taken out of the plan's assets every day, the two NAVs drift apart from the day the plans start. A direct plan NAV is higher than the regular plan NAV of the same scheme, and the gap grows each year. It is not a sign of better management. It is the same return with less taken out. ₹100 in each model, Jul 2021 to Jul 2026 Rebased to 100 at Jul 2021, after charges. The Nifty 50 TRI is drawn as its CAGR line, not the daily index. Model, back tested, not actual client returns. Source: RupeeCase published model record (lineup.json), monthly. As of 31 Jul 2026. ## Why do direct plans exist? Before 2013, nearly every rupee in a fund paid for distribution whether or not a distributor was involved. SEBI's circular CIR/IMD/DF/21/2012 of 13 Sep 2012 changed that. 1. 13 Sep 2012**SEBI's circular on direct plans**A separate plan for investments not routed through a distributor, with no commission and a lower expense ratio. 2. 1 Jan 2013**Direct plans launch**Fund houses start a direct plan in their open ended schemes, with its own NAV. 3. 14 Jan 2026**New Mutual Funds Regulations notified**SEBI (Mutual Funds) Regulations, 2026 replace the 1996 regulations. 4. 1 Apr 2026**Base expense ratio in force**The cap now applies to the base expense ratio; brokerage, transaction costs and statutory levies are shown separately. Read one more paragraph, 40 words It required fund houses to offer a separate plan for direct investments, meaning investments not routed through a distributor, in both existing and new schemes, with a lower expense ratio that excludes distribution expenses and commission, and a separate NAV. ## What does the expense ratio include now? Since 1 Apr 2026, under the SEBI (Mutual Funds) Regulations, 2026, the total expense ratio of a scheme has four parts: * **Base expense ratio (BER)** * **Brokerage cost** * **Transaction cost** * **Statutory levies** Read one more paragraph and a list, 137 words 1. **Base expense ratio (BER):** the fund house's management fee and running costs, and, in a regular plan, the distribution commission. This is the part SEBI caps. 2. **Brokerage cost:** up to 0.06% of trade value in the cash market and 0.02% in derivatives, outside the base cap. 3. **Transaction cost:** exchange and clearing charges on the fund's trades. 4. **Statutory levies:** GST and other levies, on actuals. The caps on the base expense ratio fall as a scheme grows. For an open ended equity scheme, regulation 66(7) allows up to 2.10% on the first ₹500 crore of daily net assets, sliding to 0.95% on assets above the last slab; an index fund or ETF is capped at 0.90%. The cap is a ceiling for the scheme. Each plan's own figure is disclosed separately, and the direct plan's is lower. Nifty 50 Equal Weight fell at most 15.7% below its model high, month end to month end The Nifty 50 Equal Weight model, the strategy this guide uses for its examples: fall from the previous model high at each month end; 0% is a new high. Monthly points, so the daily low was deeper. Model, back tested, not actual client returns. Source: RupeeCase published model record (lineup.json), monthly. As of 31 Jul 2026. ## How big is the gap in practice? Here is one fund house's own disclosure, chosen only because it is public and recent enough to be dated. These are not recommendations. | Scheme, 31 Aug 2026 | Regular plan TER | Direct plan TER | Gap | | --- | --- | --- | --- | | Parag Parikh Flexi Cap Fund | 1.30% | 0.69% | 0.61% | | Parag Parikh ELSS Tax Saver Fund | 1.83% | 0.65% | 1.18% | | Parag Parikh Large Cap Fund | 0.76% | 0.36% | 0.40% | Read one more paragraph, 56 words The gap is not one number for the industry. It depends on the scheme, its size and the commission the fund house pays. To see any scheme's current figures, use the TER page on the AMFI site, which lists each plan's base expense ratio and other costs month by month, or the fund house's own disclosure. ## What does the gap cost over time? A gap of a fraction of a percent looks small because it is quoted per year. It is charged on the whole holding, every year, and it compounds. Read one more paragraph, 61 words At a 10% return before costs for 15 years, ₹10 lakh grows to about ₹34.9 lakh in the regular plan and about ₹38.0 lakh in the direct plan, on the default figures. The difference, about ₹3.1 lakh, is the price of the distribution over those years. Change the inputs to your own fund; the shape of the answer stays the same. ## Is a regular plan ever worth it? Yes, when you actually get something for the commission. A distributor in India is registered with AMFI, holds an ARN and must pass the NISM Series V-A certification. A good one helps you choose a mix, sets up the SIPs, keeps the paperwork straight, and, most valuably, talks you out of selling in a crash. * **Your statement** * **What you got this year** * **The alternative** **Myth**The direct plan has a higher NAV, so it is the better fund. **Fact**Both plans hold the same portfolio. The direct plan's NAV is higher only because less has been taken out in expenses since the plans began. Read one more paragraph and a list, 87 words The trouble is the case where the fund was sold once and nothing followed. Three checks I would make: * **Your statement.** The consolidated account statement shows the commission paid to your distributor across your schemes. Regulation 34 of the 2026 regulations requires it. Read the figure in rupees. * **What you got this year.** A review, a rebalance, a call when the market fell? Write it down. * **The alternative.** A direct plan with fee based advice, or no advice at all if you are confident doing it yourself. ## How do you tell which plan you hold? Look at the scheme name on your account statement or in the app. Every unit is held in a named plan, and the name says "Direct" or "Regular". Where a distributor is involved, the statement shows the distributor's ARN against the scheme. If you hold the same scheme in both plans, you will see two lines with two different NAVs on the same date. Read one more paragraph, 40 words Two quick checks while you are there: the plan option, growth or IDCW, which decides whether gains stay in the NAV or are paid out; and the purchase dates of each lot, which you will need if you ever switch. ## How do you move from regular to direct? A switch from one plan to the other is a redemption of one and a purchase of the other, even inside the same scheme. HDFC Mutual Fund's note on direct plans, for example, says units bought without a distributor can switch without an exit load, units bought through a distributor are subject to any applicable exit load, and the switch may have tax consequences. Read one more paragraph, 67 words For equity funds, a sale after more than 12 months is a long term capital gain, taxed at 12.5% above ₹1.25 lakh a year; within 12 months it is short term, at 20%, for sales from 23 Jul 2024. Many investors therefore move only new money to direct plans, and switch old units in stages, using the yearly long term exemption and waiting out exit load periods. ## Common mistake: switching everything at once The most expensive way to fix a regular plan is to switch it all on one day. You can trigger an exit load on recent SIP instalments and a capital gains bill that takes years of lower expenses to recover. Before switching, check each lot's purchase date, the exit load period, and the gain on each, and spread the switch out. ## How this shows up in RupeeCase 1. 1Model returns are shown after estimated charges: brokerage, STT, exchange fees and GST. 2. 2Turnover per rebalance, from the model record: the fee is charged only on what trades. 3. 3Your own charges and turnover, event by event, on the Ledger tab. 4. 4Platform fee: 0.2% of traded value per rebalance. About 1.2% to 3.3% of capital a year in the published record, depending on the strategy. Where it sits in RupeeCase, in words RupeeCase is not a mutual fund and has no distributor commission. You hold the shares in your own demat, and the platform charges 0.2% of the value traded at each rebalance, nothing on the holding itself. That makes the yearly cost depend on turnover: in the published rebalance record it was under 0.1% of capital for [Nifty 50 Equal Weight](/strategies/nifty-50-equal-weight) and 1.2% for [Focused Largecap 20](/strategies/focused-largecap-20), more than the direct plan TERs in the table above. Nifty 50 Equal Weight's model back test shows a CAGR of 16.35% and a deepest fall of −15.71%, as of 27 Apr 2026. For other ways to hold a ready basket in your own demat, see [smallcase alternatives](/guides/smallcase-alternatives). Compare costs in rupees on your own amount with the [expense ratio calculator](/learn/tools/expense-ratio-calculator) and the comparison against [mutual funds](/vs/mutual-funds). ## Questions investors ask What is the difference between direct and regular plans?Both are plans of the same scheme with the same portfolio. The regular plan is bought through a distributor and its expense ratio includes the distributor's commission; the direct plan has no commission, so a lower expense ratio and a higher NAV. Are direct plans safer than regular plans?No. Safety is the same, because the money sits in the same portfolio. Only the expenses differ. Risk depends on what the scheme holds, not on the plan. Why is the direct plan NAV higher?Expenses are taken from each plan's assets every day. The direct plan has lower expenses, so less is deducted, and its NAV rises above the regular plan's over time. The underlying return is the same. How much lower is a direct plan's expense ratio?It varies by scheme. In one fund house's disclosure for 31 Aug 2026 the total TER gap was 0.40 to 1.18 percentage points a year across three equity schemes. Check any scheme on the AMFI TER page. Is switching from regular to direct taxable?Yes, it can be. A switch is treated as a sale of regular units and a purchase of direct units, so capital gains tax applies to any gain, and units bought through a distributor can carry an exit load. Should I always choose a direct plan?Not always. If a distributor gives you real advice and support, the commission may be worth it. If you make your own decisions, a direct plan costs less for the same portfolio. This is a description, not advice. SSources ## Where the figures come from. Show the 8 sources 1. SEBI circular CIR/IMD/DF/21/2012, 13 Sep 2012: a separate plan for direct investments, lower expense ratio excluding distribution expenses and commission, separate NAV; as cited in HDFC Mutual Fund's direct plan FAQ, with launch from 1 Jan 2013. [hdfcfund.com](https://www.hdfcfund.com/services/faqs/introduction-direct-plan) 2. SEBI (Mutual Funds) Regulations, 2026, amended up to 7 Jul 2026: in force from 1 Apr 2026; regulation 66(7) to (10) base expense ratio limits, brokerage and transaction costs; regulation 67 total expense ratio; regulation 34 consolidated account statement with distribution commission. [sebi.gov.in](https://www.sebi.gov.in/sebi_data/attachdocs/jul-2026/1783933012694.pdf) 3. AMFI, TER of MF schemes: base expense ratio, brokerage, transaction cost and statutory levies by plan, month by month. [amfiindia.com](https://www.amfiindia.com/ter-of-mf-schemes) 4. AMFI, knowledge center, expense ratio: expenses as a percentage of daily net assets, NAV disclosed after expenses. [amfiindia.com](https://www.amfiindia.com/investor/knowledge-center-info?zoneName=expenseRatio) 5. PPFAS Mutual Fund, total expense ratio disclosure, August 2026 file, TER date 31 Aug 2026. [amc.ppfas.com](https://amc.ppfas.com/statutory-disclosures/total-expense-ratio-TER/) 6. AMFI, becoming a mutual fund distributor: NISM Series V-A certification and ARN registration. [amfiindia.com](https://www.amfiindia.com/distributor/mutual-funds-introduction?zoneName=BecomeMFDistributor) 7. Income Tax Department: listed equity and equity fund gains, 20% short term and 12.5% long term above ₹1.25 lakh, from 23 Jul 2024. [incometaxindia.gov.in](https://www.incometaxindia.gov.in/) 8. RupeeCase pricing page and published rebalance record (fee estimates to 3 Jul 2026); lineup data, model, back tested, as of 27 Apr 2026. ASee it on RupeeCase ## Nifty 50 Equal Weight All 50 Nifty names, equal weight. The simplest card on the lineup. Rebalanced every 4 weeks, in your own demat. Moderate risk band. Also built on this idea: [Focused Largecap 20](/strategies/focused-largecap-20). [Sign up for RupeeCase](https://invest.rupeecase.com/signup?strategy=nifty-50-equal-weight)[Expense ratio calculator](/learn/tools/expense-ratio-calculator) [CAGR16.4%Sharpe1.13Max DD−15.7%Minimum₹2,49,000Model, back tested, as of 27 Apr 2026. Minimum as of 8 Aug 2026. Not client returns, not a promise.](/strategies/nifty-50-equal-weight) Explore next ## Go deeper on this question. * [TopicDirect equity or mutual funds: costs, tax and ownershipA reading list: guides, modules, tools and questions](/topics/direct-equity-vs-mutual-funds/) * [Free module 6.3Mutual Funds, Structure, Types and Hidden Costs8 min read](/learn/path-6/module-6-3-mutual-funds-structure-types-costs) * [Blog noteDirect vs regular: the finder's fee you pay foreverCosts: MF, PMS, RupeeCase, a short note](/blog/2026-06-10-morning-direct-vs-regular-plan/) * [CalculatorFee drag over 20 yearsFree, with the formula and a worked example](/learn/tools/fee-drag-calculator) * [GuideSmart beta in India: factor investing on NSE, explainedSix NSE factor indices against the Nifty 50, with the dated returns.](/guides/smart-beta-india) Community ## Join my WhatsApp group. Scan the code, fillFill one short form, and join my WhatsApp group. 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[Sign up for RupeeCase](https://invest.rupeecase.com/signup)[Learn it free](/learn/) Model figures are back tested on NSE data after costs, as of the date shown: not client returns, not a promise. RupeeCase is not a mutual fund, PMS, AIF or SEBI registered investment adviser; this is education, not investment advice. About the figures and RupeeCaseIndex and fund figures carry their source and date. RupeeCase is a technology platform operated by QC Alpha Technologies Pvt Ltd. Research by QC Alpha Research Pvt Ltd, SEBI research analyst registration pending. Trades execute through your own SEBI registered broker and the shares sit in your own demat. Investments in securities markets are subject to market risks.