This 2025 mutual fund hack will save your family lakhs, if you click the right button
In a major regulatory shift, all mutual fund units held in Statement of Account (SoA) format—once infamously rigid—will become digitally transferrable, even to third parties.
- Jun 19, 2025,
- Updated Jun 19, 2025 9:01 AM IST
A silent crisis has long plagued Indian families: the inability to easily transfer mutual fund units after the death of a loved one. Portfolios get frozen. Units are hastily redeemed. Gifts are made without understanding the tax landmines. But from May 2025, that risk drops dramatically.
In a major regulatory shift, all mutual fund units held in Statement of Account (SoA) format—once infamously rigid—will become digitally transferrable, even to third parties. No more couriers. No notaries. No offline paperwork. Just a few clicks.
“This should’ve been possible years ago,” says Abhishek Kumar, SEBI-registered investment advisor and founder of Sahaj Money, who broke down the new process in a widely shared LinkedIn post.
Using MF Central or directly through CAMS/KFintech, investors will now be able to transfer units by entering PAN numbers, verifying OTPs on both sides, and completing the transfer within two working days. A 10-day lock-in will apply to prevent immediate redemptions.
The change is particularly critical for those handling legacy portfolios, succession plans, or trying to help aging parents restructure their mutual fund holdings.
But there’s a tax trap if you’re not careful.
Transfers are treated differently from gifts: capital gains tax applies to transfers, while gifts are tax-free for the sender. However, recipients who aren’t close relatives must pay income tax on gifts exceeding ₹50,000. “Your entire tax liability hinges on whether you click ‘gift’ or ‘transfer,’” Kumar warns.
The update also unlocks long-awaited features: joint holders can now be added digitally, spouses can inherit units as joint holders—not just nominees—and minors turning 18 can add family members to existing folios.
Eligibility rules include full KYC validation, lien-free and lock-in-free units, and the recipient must hold an existing folio with the same asset management company. Units will move on a FIFO (first in, first out) basis.
A silent crisis has long plagued Indian families: the inability to easily transfer mutual fund units after the death of a loved one. Portfolios get frozen. Units are hastily redeemed. Gifts are made without understanding the tax landmines. But from May 2025, that risk drops dramatically.
In a major regulatory shift, all mutual fund units held in Statement of Account (SoA) format—once infamously rigid—will become digitally transferrable, even to third parties. No more couriers. No notaries. No offline paperwork. Just a few clicks.
“This should’ve been possible years ago,” says Abhishek Kumar, SEBI-registered investment advisor and founder of Sahaj Money, who broke down the new process in a widely shared LinkedIn post.
Using MF Central or directly through CAMS/KFintech, investors will now be able to transfer units by entering PAN numbers, verifying OTPs on both sides, and completing the transfer within two working days. A 10-day lock-in will apply to prevent immediate redemptions.
The change is particularly critical for those handling legacy portfolios, succession plans, or trying to help aging parents restructure their mutual fund holdings.
But there’s a tax trap if you’re not careful.
Transfers are treated differently from gifts: capital gains tax applies to transfers, while gifts are tax-free for the sender. However, recipients who aren’t close relatives must pay income tax on gifts exceeding ₹50,000. “Your entire tax liability hinges on whether you click ‘gift’ or ‘transfer,’” Kumar warns.
The update also unlocks long-awaited features: joint holders can now be added digitally, spouses can inherit units as joint holders—not just nominees—and minors turning 18 can add family members to existing folios.
Eligibility rules include full KYC validation, lien-free and lock-in-free units, and the recipient must hold an existing folio with the same asset management company. Units will move on a FIFO (first in, first out) basis.