In today’s fast-paced financial world, flexibility isn’t a luxury—it’s a necessity. As you grow, your financial priorities evolve. You might have started investing with one platform or broker, but now you’ve discovered better tools, simpler interfaces, or goal-based options that fit your current needs. Especially if you’re saving or investing for your child’s future, you want your investments to be as dynamic as your goals.
This is where mutual fund transfers come in. Whether you want to switch platforms, consolidate your holdings, or reassign funds for legacy planning, understanding how to transfer mutual fund units can empower you to make more informed decisions.
Why it’s time to talk about Mutual Fund transfers
India’s mutual fund landscape has transformed significantly, with over 22.50 crore folios as of December 2024, per AMFI data, and the number is only growing. At the same time, investors are moving from traditional agents to smarter, more intuitive platforms that offer SIP tracking, family portfolios, and child-centric investment features.
This shift has led many to ask: Can mutual funds be transferred? Can we transfer mutual funds to another person? And if so, how to transfer mutual funds without triggering taxes or losing benefits?
If you’re someone who’s building a fund for your child’s education or long-term needs, the ability to transfer investments smoothly can be a game-changer. Let’s dive into how this works in detail.
What is a Mutual Fund transfer, and can you do it?
In simple terms, a mutual fund transfer refers to the movement of your mutual fund units from one account to another. This could be between brokers, platforms, or account types (like from a demat account to a non-demat one). It can also involve transferring funds to a family member or your child under specific rules.
Now, can mutual funds be transferred? Technically, yes—but not all types of transfers are equally straightforward. Some involve back-end processes where the units remain intact. Others, like moving investments to someone else’s name, might require additional documentation and may even trigger taxation depending on the method used.
The key is knowing which type of transfer you’re attempting, and what steps and rules apply to it.
How to transfer Mutual Funds: A detailed breakdown
Understanding how to transfer mutual funds depends on the format in which you’re currently holding your investments and where you want them moved. Let’s go over the most common transfer types in detail.
1. From One Non-Demat Account to Another Non-Demat Account
Many people still hold mutual funds in physical or non-demat form—especially if they began investing years ago through an AMC, distributor, or RTA.
To transfer these investments, both accounts must belong to the same PAN holder. The process begins by writing to the AMC or Registrar requesting the re-registration of your existing folios under a new account.
You will be required to complete KYC verification and submit identity documents. Once approved, the units are transferred and re-registered in the new folio.
This is useful when consolidating all your old holdings into one streamlined account—especially on platforms that are built on the regular plan model with Non-Demat (SoA) mode, which allows easy access, minor account management, and intuitive goal tracking without needing a demat account.
2. From Demat to Non-Demat Account
Transferring mutual funds from demat to non-demat mode is less common and a bit more cumbersome, but it can be done for specific needs—especially if you’re preparing for long-term estate planning.
You begin by submitting a rematerialisation request to your Depository Participant. This request will convert your demat-held mutual funds into physical units. Once the remat process is complete, the AMC issues a Statement of Account (SOA), which acts as proof of your mutual fund holdings.
From here, you can request the fund house or RTA to re-register these units in another individual’s name (like your child’s) if it qualifies as a gift or inheritance. This path is more documentation-heavy and is usually chosen for particular financial or legacy reasons.
3. From Non-Demat to Demat Account
This is one of the more popular transfer directions, especially for investors looking for better portfolio tracking, automation, and consolidated access.
To initiate this, you must fill out a Conversion Request Form (CRF) and submit it to your DP. Along with this, you’ll need to submit the original Statement of Account from the AMC, your PAN card, and KYC documents.
After verification, the mutual fund units are transferred into your demat account within 7–10 business days. The benefit? You can now monitor your investments in real-time and even link them to SIPs or child-focused goals on digital platforms. That said, investors looking for simpler and more flexible access often prefer regular, Non-Demat (SoA) platforms that offer direct family goal-setting without the added demat paperwork.
When should you consider a Mutual Fund transfer?
A mutual fund transfer isn’t something you do casually. But there are specific life situations where a transfer makes perfect sense—and may even save you money or bring clarity to your financial planning.
Consolidating Investments
If your investments are spread across multiple platforms, it becomes difficult to track returns, SIPs, and performance. Transferring all your mutual funds to one platform makes it easier to manage. If you’re investing for a child, having everything in one place allows better tracking of specific goals like school fees or skill-building milestones.
Switching for Better Features
Not all platforms are equal. Some offer basic access while others allow custom goal tracking, SIP scheduling, expense ratio optimization, and tax summary tools. If you’re saving for your child’s future, switching to a platform that supports family portfolios and minor investments could significantly streamline your financial journey.
Legacy Planning
Transferring mutual funds is a key part of legacy planning. As your child grows older, you might want to reassign investments under their name. Doing so with minimal disruption and maximum tax efficiency requires knowing how to execute such transfers smoothly.
What to consider before you transfer Mutual Funds
Before you hit ‘transfer,’ here are important things to consider so you don’t run into avoidable issues or costs.
Format Compatibility
Not every platform supports both demat and non-demat formats. If your investments are in physical form, and the new platform only supports demat, you may have to go through a conversion process. Understanding this saves time and paperwork.
Tax Implications
Transfers involving redemption and reinvestment can trigger capital gains tax. Equity mutual funds attract a 12.5% LTCG tax on gains above ₹1.25 lakh annually. Debt funds purchased after April 1, 2023, are taxed at the investor’s slab rate regardless of holding period.
Exit Loads
Some mutual funds charge an exit load (usually around 1%) if redeemed within a certain period. If your investments are new, check for exit load terms before redeeming and transferring.
Document Readiness
Transfers require documentation: identity proofs, PAN card, DIS or CRF forms, and sometimes relationship proofs. Having these ready reduces friction in the transfer process and ensures it goes through without delays.
Tax and cost implications of Mutual Fund transfers
Transferring mutual funds isn’t always cost-free. This section covers the financial implications that may follow a transfer—especially in the form of taxes or hidden costs.
If You Redeem and Reinvest
If your transfer involves redeeming your mutual fund units and then reinvesting in another account or platform, this counts as a sale. This event may trigger capital gains tax. For example, if you’ve held an equity fund for more than a year, only gains above ₹1.25 lakh are taxed at 12.5%.
If You Transfer Without Redemption
This route—broker to broker or account to account via DIS or CRF—does not trigger tax since there is no redemption or reinvestment involved. It’s the most efficient way to shift your holdings without interrupting long-term plans.
Operational Charges
While most transfers between accounts are free, some brokers charge ₹50–₹100 per scheme or folio as a processing fee. These are nominal but worth checking in advance.
Key benefits of transferring Mutual Funds
A mutual fund transfer isn’t just about change—it’s about improvement. When done intentionally, it opens up several strategic benefits.
This section outlines how transferring mutual funds can unlock control, cost-efficiency, and clarity—particularly when you’re investing for your child’s future in a way that’s smarter and more structured.
Easier Financial Management
By consolidating your investments under one roof, you can track, review, and rebalance your portfolio more effectively. This becomes even more critical when managing future-focused funds, such as those set aside for your child’s education or life milestones.
Aligning with Long-Term Goals
Platforms that allow goal-based planning help you assign specific targets to each mutual fund. Whether it’s for school admission, extracurricular training, or a savings plan when your child turns 18, transferring funds into such platforms gives structure to your wealth-building.
Minimising Costs Over Time
Some brokers charge maintenance fees or have higher expense ratios on regular funds. Transferring to cost-effective platforms helps you retain more of your returns—critical when you’re investing over a 10–15 year horizon for your child.
Better Tax Planning
Unified platforms offer downloadable tax reports and real-time gain/loss summaries. If you’re investing for your family, this visibility makes annual tax filing simpler and helps you plan redemptions smartly.
Conclusion
A mutual fund transfer may sound like a technical process, but at its core, it’s a strategic financial move. Whether you’re simplifying your portfolio, upgrading to better tools, or realigning investments with your child’s future in mind, transferring the right way makes all the difference.
With Toddl, you can not only save and invest on behalf of your child but also structure your investments meaningfully—by linking them to long-term goals, getting clarity on fund performance, and preparing a future-ready plan.
So, if you’ve been waiting to move your funds to a platform that understands your journey as a parent and an investor—start now.
FAQs
1. Can mutual funds be transferred from one person to another?
Yes, but only under specific scenarios like inheritance or gifting. The recipient may be required to complete KYC, and the transfer could have tax implications depending on the value of the gift.
2. How to transfer mutual funds from one broker to another?
If held in demat form, you can submit a Delivery Instruction Slip (DIS) with the new broker’s DP details. This does not involve redemption, so there are no taxes or loss of investment history.
3. What are the tax implications of a mutual fund transfer?
If the transfer involves redemption and reinvestment, capital gains tax may apply. Equity funds have LTCG tax at 12.5% on gains above ₹1.25 lakh, while debt fund taxation depends on the purchase date and income slab.
4. Can I transfer mutual funds from my demat to my child’s non-demat account?
Yes, but this involves rematerialisation and formal documentation. It’s often used in legacy or gifting scenarios and must comply with SEBI and AMC rules.
5. Is there any charge for transferring mutual funds between brokers?
Some brokers may charge a nominal fee (₹50–₹100 per ISIN), but many offer this service for free. It’s advisable to check the fee schedule before initiating the process.
6. Can I switch from regular to direct mutual funds via transfer?
No. Switching from regular to direct plans typically involves redeeming your units in regular plans and reinvesting in direct plans. This counts as a sale and will trigger capital gains tax if applicable.
Disclaimer: Mutual fund investments are subject to market risk. Please read all the scheme-related documents carefully before investing.
