Capital Gains Tax on Mutual Funds acquired through Inheritance

Hi,

I have acquired Mutual Funds through Inheritance (I am the nominee for the Mutual Funds) and the transmission of the same has been concluded.

According to the provisions of the Will, I should see those units and divide the proceeds of the sale amongst 2 beneficiaries in the ratio 50% each (after deducting any tax liabilities that may arise).

I have few queries around these :

(1) Will there be any tax that I need to pay simply due to acquisition of those units ( Even before I sell them) ?

(2) On selling those units, will there be Capital Gains tax that will need to be paid ? If so, will the Capital Gains tax need to be paid by me or by the 2 beneficiaries or by both ? Are there any other Tax implications that we need to be aware of ?

(3) What date of acquisition would be considered for the purposes of calculating Capital Gains ? Would it be the date when the units got transferred to me OR would it be the original purchase date ?

(4) How can I determine whether it would fall under Short Term Capital Gains or Long Term Capital Gains ? What date needs to be considered in such case ?

(5) Is there any waiting period post transmission of the units that I should be waiting for before selling the units ?

Thanks.

(1) There is no tax on inheritance in India.

(2) Since the Mutual Funds have come to your account and your PAN is associated with the MF any capital gain that might arise will have to paid by you. In case you want the CG tax also to be assessed between you and the other person you can gift the MF to that other person and he can sell from his account. Seek Legal advice for documentation purpose.

(3) Original purchase date

(4) Depending on the time period held from the date of purchase made till the date of sale. Also the type of MF sold will have bearing on determination of Capital Gains. Better to consult a CA and get detailed computation.

(5) No such waiting period. As soon as the MFs are in your in demat you can sell.

The above details are only for education purpose. You may consult your CA before acting on any of the details provided above.

ca.praveen @ prsrglobal.com