Do I pay tax when I switch from one mutual fund to another?

Usually yes, even though no money reaches your bank. A switch, moving from one scheme to another, or between the regular and direct plan of the same fund, is treated as a redemption of the first fund and a fresh purchase of the second. That redemption is a sale, so any gain on the units you exit is taxable, and the holding period resets on the new units. This surprises a lot of founders who assume a switch is a neutral shuffle. The same applies when you move from a regular to a direct plan to cut expense ratios: worth doing, but plan for the tax hit on accumulated gains. How the gain is taxed depends on the fund type and how long you held it, and those rules keep changing, so check the current position with a CA or on a reliable Indian tax guide.