Beginners guide on how to invest in mutual funds in India
Last updated August 22, 2026
This IPO News guide/article covers “Beginners guide on how to invest in mutual funds in India”. The page is organized around how does mutual fund work?, why should one invest in mutual fund?, how to invest in mutual funds?, mutual funds; direct vs regular plans, best brokers for mutual fund investment in india. IPO News presents the structured facts and tables in its own layout and wording.
Topics Covered
- How does mutual fund work?
- Why should one invest in mutual fund?
- How to invest in mutual funds?
- Mutual Funds; Direct Vs Regular Plans
- Best Brokers for Mutual Fund Investment in India
- How to select the best mutual fund scheme for investment?
- Taxation on Mutual Fund Investment
- Benefits of Investing in Mutual Funds
- Disadvantages of investing in mutual funds
- Final thoughts on mutual fund investment for beginners
- Zerodha Trade@20
- Compare Stock Brokers Side-by-Side
Key Facts
- India's trusted financial research platform since 2015. Live IPO GMP, subscription data, allotment status, Rights Issues, NCDs and unbiased stock broker reviews.
- Low investment as SIP can be started with as low as Rs 500 per month
- Most suitable for retail investors to invest in mutual funds via SIP mode
- Direct plans, as offered by AMCs, therefore have a low expense ratio and a higher NAV than regular plans. Investing in direct plans yields 1-1.5% more return in the long run.
- Top 10 best brokers for mutual fund investment
- There are also dividend mutual funds where investors receive regular dividend income. The dividend amount is tax-free for the investor, as the distributing company has to pay dividend distribution tax (DDT) at 10%.
- The mutual fund industry is regulated by the SEBI Regulations 1966 to ensure transparency and protect the interests of investors.
- Only ELSS funds are locked in for 3 years, which is still less than other tax-saving investment alternatives such as FDs, Public Provident Funds (PPF), and Unit-Linked Investment Plan (ULIP).
- Want to start your investment journey? Join India's Pioneer Discount Broker – ZERODHA – Free Delivery Trade, Maximum Rs 20 for F&O and Intraday, Free Direct Mutual Fund investment.
- 10 Best Mutual Fund Apps for Investors in 2025
Data Tables
| Mutual fund Type | Short-term capital gain tax | Long-term capital gain tax |
|---|---|---|
| Equity Mutual Funds | If you have sold your investment within 1 year, then you have to pay 15% short-term capital gain tax. | If you sell equity mutual funds after a year and receive gain of upto Rs 1 lakh then the entire long-term capital gain upto Rs 1 lakh will be tax-free. However, profit above the threshold limit of Rs 1 lakh will be taxed at 10%. |
| Debt Mutual Funds | If you sold debt mutual fund units before 3 years, the returns will be taxed as per the applicable tax slab of investors' income. | Profits on sell of debt mutual fund units after 3 years are called long-term capital gain. The returns derived will be taxed at 20% with indexation |
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