Mutual funds are a kind of investment vehicle that draws money on loans from various investors in order to buy stocks, bonds, diversified portfolio and other securities. These payments are managed by professional fund managers who allocate the funds and attempt to produce more income for the investors or produce capital gains. Whereas, the mutual funds gifting concept is followed by a lot of rules and the process is not straightforward. In this article we will learn about the concept of mutual fund gifting, along with all the current rules and the process to start with it.
Mutual fund gifting units is not a straightforward process and comes with a lot of rules and a long process. According to the current rules and regulations, along with the mutual fund houses, the mutual fund units cannot be easily transferred as gifts in the form of a gift deed. Although, such transfers are restricted through inheritance, re-purchase or sales. Which automatically means that instead of gifting, you need to sell the mutual fund units and then transfer the proceeds to the recipient. Moreover, in the case of inheritance, the transfer of the mutual funds involves a separate process, that is, transmission.
Mutual Fund Gifting
In case an investor dies, then the mutual fund units are directly transferred to their legal heir or nominee with the process known as transmission. The nominee specified by the investor during the process gets access to the mutual funds units and then the process simplifies the inheritance process of the mutual funds. For transferring the mutual fund units as gifts, they must be held in demand form and all the transfers should be done via market transactions. Direct inheritance is not allowed but transmission only upon death. Those who want more detailed information about the process and inheritance for mutual funds can check all guidelines from the IT department, SEBI and AMFI.
Mutual Fund Gifting Rules In 2025
| Title | Mutual Fund Gifting |
| Country | India |
| Authority | IT department, SEBI and AMF |
| Category | Finance |
| Year | 2025 |
| Who can transfer | Mutual funds holder |
| Who can be the nominee | Family, friends and minor |
| Process | Gift request with KYC |
| Documentation | PAN, ID, transfer proof, death certificate, etc. |
| Time period of transfer | 5 to 7 working days |
| Any limits | No current limit on gifting value |
What Are The Current Rules Of Mutual Fund Gifting?
- If you own mutual funds units, you can easily gift them to your nominee, friends, family, children, etc.
- The giver doesn’t need to pay any taxes but the receiver needs to pay taxes on capital sales while selling.
- Both mutual fund holders and receivers need to have valid KYC that is, ID proof and a mutual fund house.
- File a transfer request and submit it to the house fund or register. Moreover, the receiver can sell the gift units anytime.
- In case the mutual fund owner dies, their heir can receive the units by using their death certificate and submitting a request.
What Is The Process Of Mutual Fund Unit Transfer In 2025
- First, ensure that both the mutual fund owner and the receiver completed the KYC.
- Upon qualifying, you can get your gift transfer form from the mutual fund company or the registrar itself.
- Complete the transfer by filling out your form and adding all necessary details, including the folio number, units and signatures of both applicants.
- Submit all documents related to the transfer that may include the gift deed, KYC, and PAN, and give your form to the ASM or registrar.
- The processing period takes 5 to 7 working days to complete the process until it reflects in the reader’s folio.
- There is no taxation on gifting but the receiver is expected to pay the capital charge.
FAQs On Mutual Fund Gifting
What is the total number of days during the processing period of Mutual funds deed transfer?
The processing period takes 5 to 7 working days to complete the process until it reflects in the reader’s folio.
Is there any taxation applied to the mutual fund inheritance transfers?
There is no taxation on gifting but the receiver is expected to pay the capital charge.
What documentation is needed to transfer the mutual funds inheritance transfers?
In case the mutual fund owner dies, then to transfer the deed, you need to have PAN, ID, transfer proof, death certificate, etc.
