Demat-held securities

You can gift demat-held stocks, ETFs, or mutual funds directly to a recipient's demat account without selling them.

“Investors can gift shares, ETFs, mutual funds held in demat form and other eligible securities, provided the holdings are free from pledges, lock-ins or other transfer restrictions”

Off-market transfer process

The sender must add the recipient as a beneficiary using their PAN and 16-digit demat account number before initiating the transfer.

Direct transfer via CDSL Easiest

For recipients with different brokers, use CDSL Easiest to initiate off-market transfers without the recipient's account being with the same broker.

DIS method

The sender fills a delivery instruction slip with recipient details and transfer date, then submits it to the broker for execution.

Mutual funds in SoA form

Units held in SoA form can be gifted directly to non-relatives after updating KYC and validating the folio status.

Tax implications for relatives

Recipients who are relatives receive tax-free gifts regardless of the value of the financial asset.

“If the recipient is a relative, there is no tax on receipt of the financial asset, regardless of the value”

Tax implications for non-relatives

Non-relatives face tax on gifts exceeding ₹50,000 at the applicable slab rate when the asset is sold.

“If the value of the financial asset exceeds ₹ 50,000, it is considered as income from other sources, where the recipient is taxed at the applicable slab rate”

Grandfathering clause

Equity mutual funds bought before 31 January 2018 have special tax rules for capital gains.

“Equity mutual funds bought on or before 31 January 2018 have a special rule. Gains made up to that date are not taxed”

Fifo transfer rule

Transferred mutual fund units follow a first-in, first-out basis with a ten-day lock-in period to prevent fraud.

“Units move on a first-in, first-out (Fifo) basis, so the oldest units go first. To protect against fraud, the transferred units are locked from redemption for ten days”