From 1 November 2026, if you open a mutual fund company’s own website or app to start an investment, the direct plan should already be selected for you. SEBI Chairman Tuhin Kanta Pandey announced the change in late October. It matters because direct plans usually cost less every year. But it does not move your existing SIPs, and it does not cover every app you may use. Here is what changes, what does not, and what you can sensibly do about it.
For information only, not financial advice.
What exactly changes from 1 November
- Direct plans become the pre-selected option on the digital platforms (websites and apps) of asset management companies (AMCs).
- Regular plans stay available. If you choose one, you must be told clearly that it has a higher expense ratio.
- Existing investments and SIPs are not converted automatically.
Both plans hold the same portfolio and are run by the same fund manager. The difference is cost: a regular plan pays a distributor commission, so its total expense ratio is higher. Think of it as the same fund sold with and without an adviser’s fee built in.
What the change does not cover
This is the part many headlines skip. According to an INDmoney analysis summarised by Daily Financial, the rule applies to AMC websites and apps only. Bank apps, distributor portals, brokers and independent investing platforms are not covered. The same report says it was unclear how distributor-linked journeys on AMC platforms will be handled, and that no formal SEBI circular could be found as of 30 October 2026, so the exact disclosure format is not yet public. Treat the detail as developing and check the AMC’s own screen after 1 November.
How much does the plan type matter?
Daily Financial compared three large schemes (HDFC Flexi Cap, PPFAS Flexi Cap and SBI Large Cap) and found the expense gap between direct and regular was about 0.61 to 0.62 percentage points a year. That sounds small, but it compounds.
| Period | Direct plan advantage (illustrative) |
|---|---|
| 5 years | about ₹0.12 lakh |
| 10 years | about ₹0.67 lakh |
| 15 years | about ₹2.21 lakh |
| 20 years | about ₹5.83 lakh (₹83.30 lakh vs ₹77.47 lakh) |
| 25 years | about ₹13.63 lakh |
These are the source’s own figures for a ₹10,000 monthly SIP, assuming a 12% gross return and HDFC Flexi Cap expense ratios. They ignore tax and adviser fees and are not a forecast. The takeaway is simple: the gap is modest in the first few years and large over decades.
Direct vs regular: a quick comparison
| Point | Direct plan | Regular plan |
|---|---|---|
| Portfolio and fund manager | Same | Same |
| Expense ratio | Lower | Higher (includes distributor commission) |
| Who helps you | You decide and track yourself | Distributor may help with advice, paperwork and discipline |
| Default on AMC apps from 1 Nov | Yes | No, but available with a cost warning |
Regular plans can still make sense if you genuinely rely on a distributor to stop you from panic-selling in a market fall. Paying for that help is a choice, not a mistake, as long as you know you are paying.
Should you switch your old regular units?
Be careful here. Moving existing regular units to direct is treated as a redemption followed by a fresh purchase, so it can trigger capital gains tax. Daily Financial notes these rates for equity funds: gains on units held up to 12 months are taxed at 20%, and long-term gains above ₹1.25 lakh a year at 12.5%, plus surcharge and cess. Debt funds bought on or after 1 April 2023 are generally taxed at your slab rate.
A rough way to think about it: on a ₹10 lakh holding, a 0.61 percentage point saving is about ₹6,100 a year. The source gives a worked example of a ₹10 lakh holding with ₹3 lakh of gains, where a switch would cost about ₹21,900 in tax, so you would need more than three years of savings to break even. Your numbers will differ, so check your own gains first. Spreading switches across two financial years can reduce the tax.
What to do now
- Check your SIPs. Open each statement and see whether the scheme name says Direct or Regular. Compare expense ratios in the factsheet.
- For new SIPs: if you do not need an adviser, start them in the direct plan. Stopping an old regular SIP does not sell existing units and has no tax cost.
- For old units: look at your holding period and gains before switching. Waiting until units pass 12 months can lower the tax.
- When switching, keep the same scheme and confirm nominee details, bank mandate and the growth or IDCW option.
- Do not stop investing just to optimise the plan type. Missing years of SIPs costs far more than a 0.6% fee gap.
If you are new to this, our guide to financial planning basics and our note on reducing tax legally explain the groundwork. You can also see the wider money and tax changes from 1 November 2026.
Other dates worth a glance
Two time-bound items reported alongside this change: the CBDT moved the return deadline for specified audit cases for FY 2025-26 from 31 October to 21 November 2026 (it does not apply to everyone), and pensioners below 80 can submit their life certificate between 1 and 30 November 2026. Outlook Money also reports that belated or revised returns for FY 2025-26 can be filed until 31 December 2026, with possible fees. Verify your own situation on the official portals.
FAQ
Will my existing regular-plan SIP turn into a direct plan?
No. Reports say existing SIPs and units are not converted automatically. You would need to start a new direct SIP and stop the old one yourself.
Does this apply when I invest through my bank app or a broker?
Based on the INDmoney analysis summarised by Daily Financial, no. The default applies to AMC websites and apps only, though it is unclear whether it will extend later.
Are regular plans being banned?
No. Regular plans remain available. You will simply be told about the higher expense ratio if you choose one.
Bottom line
The default shifts attention to cost, which is good for ordinary investors. But the effect is narrow: new investments on AMC platforms only. Check what you already hold, compare costs against the help you actually use, and count the tax before moving old units. For information only, not financial advice. Details are as of 1 November 2026 and may change once SEBI’s formal circular appears.
Sources
- Daily Financial: SEBI makes direct plans the default on mutual fund websites and apps
- Angel One: SEBI to make direct mutual fund plans the default on AMC platforms
- Upstox: money updates for November 2026
- Outlook Money: money changes from 1 November
