Clubbing of income for Gifted Mutual fund

This query is : Resolved

Quick Summary

This discussion explores whether income from mutual funds gifted between a husband and wife is subject to clubbing provisions for tax purposes. The consensus suggests that gifting MF units doesn't alter the tax liability, as capital gains tax (LTCG) is still applicable to the original holder. Since the LTCG rate is flat, redeeming and repurchasing may not significantly change the net tax liability, simplifying the process.

Ritesh

Ritesh (Querist)
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06 August 2025 Hello Sir/Madam,
I have 1 query.
Husband and Wife both are salaried and both are paying tax on their income .
Husband had purchase Quant MF 1 years ago of Rs 1L. current value is 1.4 L for that.
Wife had purchase AXIS MF 1 year ago of Rs 1 L and current value is 1.4L for that .
Both of they have decided to exchange their MF. so husband has given Quant MF to wife of RS 1.4 L and wife has given Axis MF to husband of RS 1.4 L
So my query is
If both of them sell MF after 2 year then if clubbing of income applicable to both of them? Or then can just pay tax of own amount . Both case tax applicable is same.
After 2 year both share price is 2 L then any case of of them need to pay tax on 1 L. But for filling ITR if it need to show against clubbing or in normal.
Also what if net value of both MF is different after 2 years ?
ICICI MF (Husbant had given gift to wife) price is 2.5 L
Nippon MF (Wife had given gift to Husband) price is 2 ?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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06 August 2025 1. Technically it is correct, but practically it is not possible to transfer MF units without actual redemption. Without change of name the LTCG will be applicable over the name holder only, so gifting doesn't change tax liability.
2. Secondly now a days the LTCG is liable at flat rate of 12.5%, so whether you keep the unit or redeem and repurchase your net tax liability remains same. As such why to complicate the issue.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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24 September 2025 Good Luck...

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