New Delhi: The number of investors in mutual funds is rising rapidly, and the Securities and Exchange Board of India (SEBI) has now made it significantly easier to gift mutual fund (MF) units. Previously, investors had to sell their units and pay taxes before transferring them to family members or others. With the recent regulatory change, units can now be directly transferred without selling.
According to SEBI’s updated rules, both Demat and Statement of Account (SOA) units can be gifted or transferred. This applies to transfers via wills, inheritance, or addition/removal of joint holders. Earlier, only Demat units could be transferred, while SOA units required selling, which triggered capital gains tax.
Key Benefits for Investors
Tax experts highlight that this change removes a major barrier for gifting, inheritance, and joint-holding arrangements. For instance, an investor with significant gains can now transfer units directly to adult children or parents. Gains may fall under Section 87A, potentially making them completely tax-free for recipients with low or no income.
International tax expert Mukesh Patel noted that long-awaited reforms like this allow families to manage wealth more efficiently while avoiding unnecessary tax burdens. Mutual funds, already a vital investment for Indian households, can now be passed on seamlessly within families.
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