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Gifting Stocks & Mutual Funds on Raksha Bandhan: Are you planning to give your sister the same old cash, sweets, or clothes this Raksha Bandhan? Break the trend this time and gift your sister 'financial security'—a gift that doesn't lose value over time but instead appreciates manifold.

The best part is that there is no 'gift tax' applicable when transferring shares or mutual funds between siblings. Want to know how to transfer shares and SIPs to your sister's Demat account in just two minutes using your mobile? Here is the step-by-step process and an overview of the tax rules.

How to gift shares to your sister

To gift shares, both you and your sister must have Demat accounts. The process is quite simple across various brokers (such as Zerodha, Groww, AngelOne, etc.). Here is the complete process:

Go to the 'Gift Stocks' or 'Off-Market Transfer' section on your broker's app or portal.
Enter your sister's name, PAN, and Demat account details (Client ID/DP ID).
Select the quantity of shares or ETFs you wish to gift.
After submitting the request, verify it using the OTP sent to your registered mobile number.
Approval by the sister: To complete the transfer, your sister must accept the gift request within 24 hours by visiting her broker's app or the CDSL/NSDL portal.

How to gift mutual funds?

The process for directly transferring mutual funds (Demat/Folio transfer) differs slightly, but you can do it in two easy ways:

Method A (Start a new SIP or lump-sum investment): Make a lump-sum investment directly into your sister's mutual fund folio from your bank account or start an SIP in her name.

Method B (Online gifting features): Several platforms (such as Zerodha Coin, NSDL/CDSL) offer the facility to gift mutual fund units directly from one Demat account to another via an off-market transfer. For this, the sister must have an active Demat account.

Tax Rules

Tax regulations regarding transactions between siblings under the Income Tax Act offer significant relief:

Tax on receiving the gift: No gift tax is levied on shares or mutual funds gifted to a sister (a close relative), regardless of their value.

Tax on selling shares: In the future, when your sister sells these shares, she will be liable to pay capital gains tax.

Please note that the tax will be calculated based on the date of purchase and the purchase cost.

This Raksha Bandhan, give your sister a gift that appreciates in value over time. A gift in the form of shares or mutual funds will prove helpful in fulfilling a major dream or financial goal of hers in the years to come.

Disclaimer: This content has been sourced and edited from Money Control. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.