Gifting MF units in Zerodha

Zerodha
1

Hi Everyone,

My wife’s father wish to gift 10L to our daughter from his retiremnt corpus. We wish to invest them in a MF lumpsum and intend them to keep as-is for next 18 years or so until our daughter becomes an adult. She is 1 years 9 months as of today.

My questions are - Is it possible and legal to transfer the entire amount accumulated in next 18 years without having any tax implication on me or my wife.

While I understand that my daughter might have to pay tax on profit when she sells those units, but does she have to pay any tax for just getting those units from my wife.

Is the money transferred along with the holding period or will she get the fresh Unit on the NAV of transfer day. To simplify - if I purchase 10 units today at Rs 10 and and they grow to Rs 100. Will my daughter also get at base price of 10 with 90 as profit, or will she get 10 shares at @100 with zero profit.

I would appreciate any clarity on this. Please help

2

As far as I know, a grandfather gifting ₹10 lakh to his granddaughter is not taxable.

In my opinion, it’s better to open a demat account directly in your daughter’s name. Once she becomes a major, the account can simply be converted. Investing first in your wife’s name and then transferring it to your daughter only adds unnecessary complexity, especially when calculating taxes.

Also, if you transfer mutual funds that were bought at ₹10 and are worth ₹100 at the time of transfer, the ₹90 gain is treated as your capital gain. After the transfer, ₹100 becomes the daughter’s purchase price (cost of acquisition). This makes future tax calculations more complicated.

3

@Quicko