New Delhi, Nov. 3 -- The Securities and Exchange Board of India (SEBI) has recommended removing capital gains tax on switching between mutual fund schemes.

According to a Reuters report on Monday, SEBI has recommended that switching from one mutual fund scheme to another should not be treated as a taxable sale if the units have been held for more than a year.

Here's what mutual fund switching means, how it is taxed under current rules, and what could change.

Harsh Vardhan Dawar, ACA, CFA, FRM, Founder of Wealth Cafe, said, "When you sell a Mutual Fund scheme and buy another scheme of the same fund (be it debt, equity or hybrid), it is called switching."

Generally, investors switch schemes when they want to rebalance the portfolio or m...