You are currently viewing Transfer of Mutual Fund Units (Non-Demat Mode) — Explained Simply

Transfer of Mutual Fund Units (Non-Demat Mode) — Explained Simply

Have you ever wanted to gift your mutual fund investments to a sibling or add your spouse’s name to your folio? Or perhaps, you’ve inherited units from a loved one and are unsure what to do next?

Good news — the mutual fund industry now allows easy transfer of mutual fund units held in non-demat (SOA) mode through digital platforms. And it’s simpler than you might think!

Let’s break this down with real-life context.

First, let us understand what is SOA (Non-Demat) Mode?

SOA stands for “Statement of Account” mode. It’s like holding your mutual fund units with the mutual fund company (AMC), but not linked to a Demat account. This is the most common mode used by retail investors.

Real-Life Scenarios Where Transfers Are Allowed

  1. After a Death in the Family
    • Suppose your father had investments in mutual funds. After his death
      • Units are transmitted to your mother (nominee).
      • She wants to pass them equally to you and your sibling.
      • Transfer to legal heirs is now possible.
  2. You Want to Gift Investments
    • Want to gift some of your mutual fund units to your sister for Raksha Bandhan?
    • Gifting is now allowed — no stamp duty or capital gains tax at the time of transfer.
  3. Adding Your Spouse’s Name
    • If you got married recently and want to add your partner as a joint holder in your folio.
    • Simply update the folio — no capital gains or tax liability here.
  4. When a Minor Turns 18
    • Once your child turns major, you can:
      • Add yourself as a joint holder.
      • Or help them manage the folio responsibly.
      • This too is allowed digitally.
  5. Transferring to Third Parties
        • You can even transfer to someone outside the family.
        • This attracts stamp duty (0.015%) and capital gains at the time of redemption.

The Step-by-Step Transfer Process

Step 1: Eligibility Check – Both transferor and transferee must have KYC-validated folios and units must not be under lock-in, lien, or pledge.

Step 2: Submit Transfer Request – Log in to RTA portals like CAMS, KFintech, or MF Central. Enter PAN, folio details, and reason for transfer.

Step 3: OTP Verification – OTPs are sent to the email and mobile number of both transferor and transferee.

Step 4: Stamp Duty (if applicable) – For third-party transfers, stamp duty is auto-calculated and must be paid online.

Step 5: Confirmation & Statement – Once processed (usually within T+2 working days), you’ll receive an updated Statement of Account.

Just remember to:

  • Check KYC status (must be “Validated’).
  • Ensure your email and mobile are updated.
  • Discuss with your tax advisor if it involves siblings or third parties.

Important Points to Note            

  • No transfers allowed to or from minor folios.
  • ELSS transfers allowed only after 3-year lock-in.
  • All transfers are reported to the Income Tax Department.
  • Once executed, transfers cannot be cancelled.
  • A 10-day cooling-off period applies before the transferee can redeem the units.

Where to Initiate Transfer?

  • Only through official digital platforms:
    • CAMS
    • KFintech
    • MF Central
    • AMCs’ Websites
    • Physical transfer forms are not accepted anymore.

Final Thoughts

The new system makes it easier to pass on wealth, gift investments, or manage joint holdings — all in a completely digital, transparent and tax-compliant manner.

Use this power wisely. Whether it’s empowering your children, honoring your parents, or supporting a loved one — your mutual fund units can now carry not just value, but meaning.