Effect of IDBI MF merger with LIC MF

Zerodha Coin - Direct MF
1

IDBI MF schemes are going to be merged with corresponding schemes in LIC MF schemes.

I had some IDBI Debt MF pledged with Zerodha - I saw they got unpledged on 28/7 (Friday) -

  1. what will happen to my margin on 31/7 (Monday) ?
  2. will the merged LIC MF units get automatically pledged on 31/7 (Monday) ? though couldn’t find anywhere by when I will receive the LIC units.
  3. I did not receive any notification that one of my underlying is going to get unpledged (thankfully I still have other things pledged and my existing position requires low margin which is still covered), did Zerodha intentionally not reach out to me (because I would have had enough margin) ? what would have happened if I still needed higher margin ? would Zerodha have closed my positions or started charging penalty ?

Now on the question of holding period

I was holding the debt fund for close to 2 years, will I be liable to pay STCG in FY23-24 or I will keep on holding the stock and my holding period will be 2yrs.+ only going forward or will it reset to 0 once I get LIC MF units- its not clear what happens here - any link or past answer will be helpful here.

@ShubhS9 @Bhuvan please help here

2

@Quicko Can You help in the holding period of above question ? Is merger considered as a sale of IDBI units and buy of LIC units ?

3

@Jason_Castelino @Meher_Smaran @nithin Can anyone please help me with above queries ?

4

A merger of mutual fund schemes does not induce any tax liability for an investor. Investors are liable to taxation only when they make a redemption. So if you would have decided to stick with the new scheme, your investment must have automatically transferred to the new scheme and there is no tax liability. You will be taxed when you redeem your mutual fund. For the purpose of calculating capital gains at that time, the original date of purchase and cost (of the old scheme) is considered.

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5

Hi @Pratyush_Raj

Sorry for the delayed response. Checking this with the team.

6

Hi @Pratyush_Raj

The holding period will be considered from the date you originally purchased the IDBI MF. It will be considered as LTCG if you have held them for more than 3 years.
The IDBI MF will be exchanged for LIC MF.

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7

@Meher_Smaran Any updates ? Shouldn’t there have been some notification on email or nudge shown on the app ?

8

@Pratyush_Raj apologies for the delay in responding

We sent out an email notification in regard to this to your email id, the units were unpledged and you were required to keep a sufficient margin.

No, once the new merged units are allotted you will be able to pledge them if the ISIN is available in the NSCCL list of securities.

An email with the Subject IDBI mutual funds Unpledged owing to Merger of AMCs was sent to your registered email id, notifying this change and what you are required to do.

We are working on having nudges live on the coin app, once done you will be able to see all such notification on SIP and scheme window.

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