SEBI now lets you gift mutual funds without tax worries
What's the story
The Securities and Exchange Board of India (SEBI) has introduced a new regulation to simplify the process of gifting mutual fund units. The move is expected to bring significant tax savings for millions of investors. Under the new rules, you can now transfer your mutual fund units directly without having to redeem them first. This means no more capital gains tax hassles when passing on investments to family members in lower tax brackets.
Comprehensive coverage
New regulation covers all types of mutual fund units
The new SEBI regulation covers all types of mutual fund units, including those held in demat accounts and statement of account (SOA)-based units. Earlier, only demat-held units could be transferred easily; others needed costly redemption. Now, both types can be gifted smoothly. This change is expected to make gifting and inheritance processes much easier and more tax-efficient for investors.
Expert opinions
Financial advisors welcome SEBI's new regulation
Under the new SEBI rules, investors with substantial mutual fund gains can directly transfer units to an eligible family member with little or no taxable incom. The recipient's gains may fall entirely under the Section 87A rebate limit (up to ₹12 lakh), effectively making them tax-free. International tax expert Mukesh Patel called it a long-awaited reform: "If someone gifts ₹10 lakh of gains to an adult child with no income, the entire gain can be tax-free."