How to Transfer Mutual Fund Units in SOA (Non-Demat) Mode – Complete FAQ Guide
Introduction :
Transferring mutual fund units held in Statement of Account (SOA) / Non-Demat mode is now possible through a fully online and regulated process introduced by SEBI and implemented by AMCs and RTAs.
This facility allows investors to add or remove joint holders, gift mutual fund units, transfer units to siblings or third parties, and move units to legal heirs, subject to specific rules and eligibility conditions.
To help investors clearly understand when, how, and under what conditions mutual fund units can be transferred, we have compiled this comprehensive FAQ guide.
The questions below are written in simple language, based on actual investor queries searched on Google, and cover eligibility, platforms, tax impact, stamp duty, KYC, NRI rules, timelines, restrictions, and compliance requirements for transferring mutual fund units in SOA mode.
1. When can mutual fund units be transferred in SOA (non-demat) mode?
Mutual fund units held in Statement of Account (SOA) mode can be transferred in situations such as:
-
On death of a joint holder, when the surviving holder wants to add new joint holder(s)
-
When a nominee transfers units to legal heirs after transmission
-
When a minor becomes major and wants to add family members as joint holders
-
Transfer of units to siblings
-
Gifting of units
-
Transfer of units to a third party
-
Addition or deletion of joint holders in an existing folio
2. Is transfer of mutual fund units allowed under all mutual fund schemes?
This facility is available for all mutual fund schemes, except:
-
Exchange Traded Funds (ETFs)
-
Solution-oriented schemes like Children’s Fund and Retirement Fund where age-based eligibility applies
The facility is applicable only for units held in SOA (non-demat) mode.
3. Who is eligible to use the mutual fund unit transfer facility in SOA mode?
All Resident Indians (RI) and Non-Resident Indians (NRI) holding units in SOA mode can initiate transfers, subject to these restrictions:
-
Transfers involving minor folios are not allowed
-
Transfer from RI/NRI-NRO to NRI-NRE is not allowed
-
Transfer from NRI-NRE to RI/NRI-NRO is allowed
4. Through which platforms can mutual fund units be transferred online?
Transfers can be initiated only through online platforms such as:
5. Is mutual fund unit transfer available only through online mode?
Yes. Physical or paper-based transfer requests are not allowed. All transfers must be done online only.
6. What are the basic requirements before transferring mutual fund units?
Key requirements include:
-
Units must be free from lien, pledge, freeze, or lock-in
-
Transferor and transferee must have folios in the same AMC
-
Transferee’s KYC must be Validated
-
Registered bank account of transferor must be active
-
Nomination or opt-out must be completed in transferee folio
-
PAN, email ID, and mobile number must be registered for all holders
7. Can mutual fund units be transferred if they are under lien, lock-in, or freeze?
No. Units under lien, pledge, lock-in (including ELSS lock-in), frozen folios, or regulatory restrictions are not eligible for transfer.
8. Is it mandatory for transferor and transferee to have folios in the same mutual fund?
Yes. If the transferee does not have an existing folio, a zero-balance folio must be created before initiating the transfer.
9. What KYC status is required for transferee during mutual fund unit transfer?
10. Is nomination mandatory in the transferee’s mutual fund folio?
Yes. For single-holding folios, the transferee must either:
-
Register a nominee, or
-
Submit an opt-out declaration
11. Is PAN required for all holders involved in mutual fund unit transfer?
Yes. PAN details must be provided for all transferors and transferees, including joint holders.
12. Are email ID and mobile number mandatory for all joint holders during transfer?
Yes. Each holder must have their own registered email ID and mobile number for OTP verification.
13. Who is responsible for tax and legal compliance during mutual fund unit transfer?
The responsibility lies entirely with the transferor and transferee. AMCs and RTAs do not provide tax advice.
14. How is the value of mutual fund units calculated at the time of transfer?
The value is calculated based on the last available NAV at the time the transfer request is initiated.
15. Is any tax deducted by AMC or RTA during mutual fund unit transfer?
No tax is deducted by AMC or RTA. Any applicable tax must be handled by the investor while filing returns.
16. Can mutual fund unit transfer be used to avoid tax liability?
No. Transfers must not be used to bypass tax or statutory obligations. Misuse may attract regulatory action.
17. Is gifting of mutual fund units to siblings and third parties taxed differently?
Yes. Tax treatment differs for:
-
Gifts to relatives
-
Gifts to siblings
-
Transfers to third parties
Investors should consult their tax advisor before initiating such transfers.
18. Is stamp duty applicable on mutual fund unit transfers?
Stamp duty applies only for transfers to third parties and in certain cases of sibling transfers involving consideration. It is calculated based on the latest available NAV.
19. Are mutual fund unit transfers reported to the Income Tax Department?
Yes. Transfers are reported under SFT (Statement of Financial Transactions) and reflected in Form 26AS/AIS, except certain exempt scenarios.
20. Is partial transfer of mutual fund units allowed?
Yes. Partial transfer is permitted. However, if the remaining balance falls below the minimum threshold, residual units will be redeemed compulsorily.
21. What happens if balance units fall below the minimum limit after transfer?
Such units will be automatically redeemed and the proceeds paid to the transferor.
22. Can a nominee transfer mutual fund units to legal heirs?
Yes. Nominees can transfer units to legal heirs after transmission by selecting the appropriate option.
23. Is transfer allowed if the nominee has already redeemed all units?
No. Once units are fully redeemed, transfer is not possible.
24. Can nominee transfer remaining units if partial redemption is already done?
Yes, only the remaining available units can be transferred.
25. Is TDS deducted on transfer of mutual fund units?
Currently, no TDS is deducted by AMC/RTA. Any future regulatory requirement will be applied without prior notice.
26. When is a new mutual fund folio required for transferee?
A new folio is required only if the transferee does not already have a folio with the AMC.
27. Is nomination mandatory for newly created transferee folios?
Yes, nomination or opt-out is mandatory for single-holding folios.
28. Is stamp duty applicable on gifting mutual fund units?
Stamp duty may apply depending on whether consideration is involved. AMC/RTA will apply duty based on available information.
29. Are transferred mutual fund units treated as capital gains transactions?
Transfers to siblings and third parties are treated as:
-
Redemption for transferor
-
Purchase for transferee
Capital gains will apply accordingly.
30. How are mutual fund unit transfers reflected in capital gains statements?
Transfer-out appears as redemption and transfer-in appears as purchase.
31. What communication and verification steps are involved during unit transfer?
OTP verification, confirmation emails/SMS, and updated SOA are sent to both parties.
32. Are OTPs mandatory for confirming mutual fund unit transfers?
Yes. OTPs are mandatory for all holders involved.
33. Do Phase-I rules still apply to mutual fund unit transfers?
Yes. All Phase-I rules remain applicable under Phase-II as well.
34. From which date is Phase-II mutual fund unit transfer facility effective?
Phase-II is effective from May 19, 2025, implemented in a phased manner.
35. Why are mutual fund unit transfers allowed only through online platforms?
To prevent misuse, enable unit locking, ensure stamp duty collection, and meet SEBI timelines.
36. Can mutual fund units be transferred in ELSS schemes?
Yes, after completion of the 3-year lock-in period. No Section 80C benefit is available to transferee.
37. Can mutual fund unit transfer be initiated on IDCW record date?
Yes. IDCW payout will go to the transferor.
38. Can a new ARN or broker code be added during unit transfer?
No. Existing ARN and plan remain unchanged.
39. Are there any cut-off timings for mutual fund unit transfer requests?
No. There is no NAV-based cut-off timing.
40. Can transferee redeem mutual fund units immediately after transfer?
No. Redemption is restricted for 10 days after transfer.
41. Are mutual fund unit transfers reported to Income Tax or CBDT?
Yes, wherever PANs differ, transfers are reported under SFT.
42. Can specific investments within a folio be selected for transfer?
No. Transfers are processed strictly on FIFO basis.
43. Who can receive gifted mutual fund units?
Gifting is generally allowed to family members and at the discretion of the transferor.
44. Is gift deed required for gifting mutual fund units?
Currently, no gift deed is mandatory, but AMC/RTA may request documents if required.
45. What happens to existing nominee details during unit transfer?
Nominee details of the transferee folio remain unchanged.
46. Is STT applicable on transfer of equity mutual fund units?
No. STT is not applicable as this is an off-market transfer.
47. What is the turnaround time (TAT) for mutual fund unit transfer?
Transfers are completed within T+2 business days, subject to successful verification.
48. Is physical submission of forms required for unit transfer?
No. The entire process is digital.
49. Are joint holding patterns allowed during mutual fund unit transfer?
Yes, addition and deletion of joint holders is permitted for valid reasons.
50. Can mutual fund unit transfer be cancelled after execution?
No. Once executed, transfers cannot be reversed.
51. What happens if the transferee does not complete KYC or FATCA requirements?
If the transferee’s KYC or FATCA is not completed or validated, the transfer request will not be allowed to proceed. KYC validation is checked before submission itself.
52. Are joint holding patterns allowed during mutual fund unit transfer?
Yes. Addition or deletion of joint holders is allowed, provided the purpose is legitimate and all compliance conditions are met.
53. Does bank account mismatch affect mutual fund unit transfer?
No. Since this is an off-market transfer and no payment is involved, bank account mismatch between transferor and transferee does not impact the transfer.
54. Can mutual fund units be transferred between minor and major accounts?
No. Transfers involving minor folios are not allowed. Transfer between minor-to-major or major-to-minor accounts is prohibited.
55. Is there any limit on the number of transfers that can be initiated from a folio?
Currently, there is no fixed limit, except:
-
A 10-day cooling period after a transfer
-
Transfers may be reviewed if abnormal activity is observed
56. Is there a daily limit on OTP generation for unit transfers?
Yes. A maximum of 5 OTPs per day can be generated. Attempts beyond this limit will be blocked for the day.
57. Is transfer allowed between Resident Indian (RI) and NRI folios?
Yes, with restrictions:
-
RI / NRI-NRO ➝ NRI-NRE ❌ Not allowed
-
NRI-NRE ➝ RI / NRI-NRO ✅ Allowed
All tax and legal implications must be evaluated by the investors.
58. What KYC status is acceptable for NRIs during unit transfer?
NRIs are allowed with KYC Registered status, subject to SEBI/AMFI timelines and completion of all NRI-specific compliances such as FATCA/CRS, overseas address, and declarations.
59. Is minimum investment or balance criteria applicable during transfers?
No. Minimum investment or redemption limits defined in SID are not applied for transfers, unless mandated in the future.
60. How do transfer transactions appear in capital gain statements?
-
Transfer-out appears as Redemption / Outflow
-
Transfer-in appears as Purchase / Inflow
These are reflected in capital gain and transaction statements.
61. Can nominee details be changed during mutual fund unit transfer?
No. Nominee change cannot be done during the transfer process. It can be requested separately after the transfer is completed.
62. What is the turnaround time (TAT) for addition or deletion of joint holders?
The standard TAT is T+2 business days, subject to successful verification.
63. How many joint holders can be added in a mutual fund folio?
-
Maximum 2 joint holders are allowed
-
If one joint holder already exists, only one more can be added
-
Not applicable if already two joint holders exist
64. Is there any restriction on the number of units that can be transferred?
There is no restriction, provided:
-
Units are lock-free
-
Post-transfer balance does not fall below scheme minimum (else auto-redemption applies)
65. Are multiple transfers from the same folio allowed on the same day?
There is no explicit restriction, but:
-
Transfers are processed on FIFO basis
-
Availability of lock-free units determines execution
66. Is there a limit on number of units nominee can transfer to legal heirs?
No. Nominee can transfer up to 100% of the available units, subject to eligibility.
67. Can a nominee be added as a joint holder?
No. A nominee cannot be added as a joint holder in the folio.
68. Can addition and deletion of joint holders be done on the same day?
Yes. Deletion of an existing holder and addition of a new holder can be done on the same day, subject to validation and FIFO processing.
69. Is joint holder addition allowed if KYC status is ‘Registered’?
70. Is transfer allowed if joint holders’ KYC is not validated?
No. Transfer is not allowed unless required KYC status conditions are met.
71. Can deletion of a holder be used when a joint holder has expired?
No. In case of death, transmission process must be followed. Deletion option must not be misused.
72. Can mutual fund unit transfer be cancelled after execution?
No. Once the transfer is executed and posted, it cannot be reversed or cancelled.
73. Is exit load applicable on transfer of mutual fund units?
Currently, no exit load is charged. If mandated in future, the same will be applied.
74. Are units under lien, pledge, or frozen folios eligible for transfer?
If you have any question, kindly email us at finguidebuddy@gmail.com or call us at 9891645052.
Comments
Post a Comment