Transferring mutual fund units between family members involves redeeming units from one account and either gifting or reinvesting them in another family member’s account. Direct transfer of units is usually not allowed, so you must sell units from your account and the receiver needs to invest the proceeds in their own mutual fund account. This process is simple but requires KYC compliance and proper documentation.
Can mutual fund units be directly transferred between family members?
No, mutual fund units cannot be directly transferred from one person’s account to another’s. You have to redeem (sell) the units first, then the receiving family member can invest the money received in their own account.
This ensures proper record-keeping and compliance with tax laws.
Steps to transfer mutual fund units between family members
1. The person transferring the units redeems (sells) the units from their mutual fund account.
2. The redeemed amount is then gifted or given to the family member who will receive the funds.
3. The receiving family member completes KYC (if not done already) and invests the amount in the same or different mutual fund scheme in their own account.
4. Both parties should keep the records of the transaction for future reference, especially for tax purposes.
This method is simple and legally compliant.
Is KYC necessary for the receiving family member?
Yes, the receiving family member must complete KYC (Know Your Customer) before investing in mutual funds. KYC is mandatory in India to comply with regulations and helps protect investors. Without KYC, mutual fund investments cannot be made.
KYC can be completed easily online or offline through authorized agencies.
Are there any tax implications in transferring mutual fund units?
Yes, redeeming mutual fund units may attract capital gains tax depending on the holding period and type of fund. The person transferring units will be responsible for paying any taxes on gains made. The receiving family member will have a fresh purchase date for the new investment.
It is important to consult a tax advisor to understand tax liabilities before transferring mutual fund units.
Can mutual fund units be gifted to family members?
Yes, mutual fund units can be gifted by redeeming them and then gifting the redeemed money. The recipient can then invest this money in their own mutual fund account. This is a common way to transfer wealth within families. Gifts between specified relatives are exempt from gift tax in India, but documentation should be maintained.
This method is safe and easy for family wealth transfers.
Contact Angel One Support at 7748000080 or 7771000860 for mutual fund investments, demat account opening, or trading queries.
© 2024 by Priya Sahu. All Rights Reserved.
