Good News From SEBI: Gifting Mutual Funds Is Now Easier

Hyderabad, Dec 3 (Maxim news): Good news for millions of Indian investors who invest in mutual funds.  A recent significant change by market regulator SEBI has made it easier than ever to gift or transfer mutual fund units from one person to another. This opens up a new avenue for investors with investments worth crores of rupees to save a huge amount in taxes.

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According to the changed rules, investors can now directly transfer mutual fund units held in demat form as well as units held in statement of account form, SEBI has revealed. However, earlier, if mutual fund units not held in demat holdings were to be gifted, they had to be redeemed, the money given as a gift and then new units bouth with that money. This redemption process resulted in unnecessary tax being paid on the gains made on the units till then. This was a major hurdle in gifting, inheritance and joint holdings.

Experts say that with the new reforms brought by SEBI, investors in higher tax brackets can easily transfer their mutual fund units to family members with low or no income, such as parents and children, and get tax benefits. If a person gifts units with a profit of Rs. 10 lakh to his children who have no income, the entire profit is likely to be tax free under Section 87A.  When a person with a low income sells these units, if their total income is within the tax limit, there is no need to pay capital gains tax.

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Financial Advisor revealed that with the changes now in place, transferring mutual funds can be completed with just one link and two OTPs.  (Maxim News)

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