I have invested in 10 equity funds more than five years ago in my name, costing above Rs 10 lakhs in total from my taxed salary earnings.
I want to gift these MFs to my two adult sons. Please advise about tax liability for me and my sons, both of whom are in 30 per cent tax bracket. I am in the 20 per cent tax range.
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.