As we celebrate the bond between brothers and sisters on Raksha Bandhan, a financial gift can make the occasion more meaningful.
Instead of a traditional present, you can gift mutual fund units to your sibling and help build a long-term financial cushion.
From the transfer process and eligibility to taxation and SIPs, here’s what investors need to know.
Manoj Sharma, Co-founder, Head – Alliance & Distributions, InvestValue, explained that mutual fund units can be gifted through Demat and Statement of Account (SoA) modes. Since 19 May 2025, eligible SoA units can also be transferred to siblings, eliminating the need to dematerialise them first.
Shams Tabrej, Co-founder & CEO, Ezeepay, said the recipient generally needs a matching mutual fund folio. If unavailable, a zero-balance folio may be opened with KYC, PAN, bank details, FATCA inputs, and nomination/opt-out choice.
Rahul Jain, President & Head, Nuvama Wealth, mentioned these criteria:
Gibin John, Senior Investment Strategist, Geojit Investments, said most equity, debt, hybrid and index funds can be gifted, provided the units are free from restrictions such as pledge, lien or lock-in.
Jain said Demat-held units have been transferable since 2010, with the recipient requiring a demat account. The SEBI-AMFI framework now permits SoA-to-SoA gifting, although investors should confirm that the specific AMC/RTA has enabled the facility.
John said transfer-related charges, including DP fees and stamp duty, may apply. Partial or full transfers are allowed, provided units are not locked, pledged, under lien, or otherwise restricted.
Sharma said CAMS currently charges 0.015% stamp duty for SoA transfers, borne by the transferor. Demat transfers may attract broker/DP charges. Partial transfers are permitted, although a holding falling below the scheme’s minimum balance may be compulsorily redeemed.
Tabrej said exit load is linked to redemption, so investors should not redeem units merely to pass them on unless necessary.
Sharma added that the 10-business-day cooling-off period after an SoA transfer is not an exit load. During this period, the recipient cannot redeem the transferred units.
“The Raksha Bandhan gift date does not reset the tax timeline. When the recipient later redeems the units, capital gains tax is paid by the recipient, based on the donor’s original purchase cost and holding period,” Tabrej said.
He further mentioned that both siblings should retain the following documents:
“A gift deed can also be retained as supporting evidence of the transfer,” Sharma says.
