Please advise how to gift my mutual funds to my son??? Whether a gift deed executed by me is enough or any other formalities to comply with ?? Muthan

Ans: There is some grey area on transfer of mutual funds as the SEBI regulations allow it, but there are restrictions on making third party payments. So, mutual funds only execute transfers through transmission, on demise of the person in whose name the units are held.

You maybe thus be forced to sell the units and transfer the money in your sons's names, from which they can invest.

There is no gift tax to relatives.

Equity mutual funds are not taxed as per tax slabs, but under capital gains, based on whether it is long term or short term capital gains.

Ans: Hello,

Your mother's intention to distribute her investments among her children is a thoughtful gesture. Here's a simple explanation of the process and its tax implications in India.

1. Gifting Process: Your mother can gift her shares and mutual funds to her children. This can be done through a gift deed or even a simple letter stating her intention to gift the shares. The letter should mention the details of the shares/mutual funds, the name of the recipient, and the relationship between the donor (your mother) and the donee (her children).

2. Tax Implications for the Donor (Your Mother): In India, any gift given by a parent to their child does not attract any tax, irrespective of the value. So, your mother will not have to pay any tax when she gifts these shares and mutual funds to her children.

3. Tax Implications for the Donee (Her Children): The children will not have to pay any tax upon receiving the gift. However, if they decide to sell these shares or mutual funds in the future, they will be liable to pay tax under the head 'Income from Capital Gains'. The tax rate will depend on whether it's a short-term or long-term capital gain.

4. Gift Deed: Although it's not mandatory, it's advisable to execute a gift deed for each child. This will serve as a legal document and can be useful in case of any disputes in the future.

I hope this helps!

Ans: Transfer of shares by father to its son under gift deed will not be considered as income and accordingly not taxable. When son transfer shares, cost and period of holding of father will be considered for calculating Income from capital gain.

Ans: Amount given by father to son as gift is not an Income. Thus, no tax is applicable.