Units of mutual funds cannot be transferred

Units of mutual funds cannot be transferred. They can only be transmitted upon the death of the original holder.

Q: I have invested in units of mutual funds in India. I want to gift some units to my spouse and minor children. How should I go about it?

A: Units of mutual funds cannot be transferred. They can only be transmitted upon the death of the original holder. Therefore, the only way to make a gift is to redeem the units and from the redemption proceeds deposited in your bank account, you may gift the amount to your spouse, out of which he or she may subscribe to units of a mutual fund of his or her choice. You cannot make an investment in your spouse's name by using the funds from your bank account.

However, certain funds have devised schemes for children. In such a case, you can make an investment for purchasing the units in the name of your minor children. Most of the funds offer the option whereby the units can be redeemed only after the child reaches the age of 18. There is also the option to regularly withdraw the funds so that educational expenses can be met as and when required. Any capital gains chargeable on redemption of units by the spouse would be taxable in the hands of the individual who has gifted the money for such investment in the mutual funds. This is in view of the provisions of section 64 of the Income-tax Act.

Q: Exporters of goods from India have not received refunds of the Goods & Services Tax. Is the problem being resolved?

A: The Central Board of Excise & Customs (CBEC) will be refunding large amounts during the fortnight ending March 29, 2018. It has been decided that to ensure faster disposal of exporters' pending claims, refunds would not be held back on account of arithmetical errors or on account of minor procedural lapses.  About 40 per cent of the IGST claims have already been cleared.

A circular issued by the CBEC has stated that substantive benefits of zero rating would not be denied where exports have actually been made. The delay in furnishing the letter of undertaking would be condoned in such cases. Where the LUT has been furnished by exporters, the claimants would not be required to make a self declaration that they have not been prosecuted. In case of mismatch between the values of GST invoice and the shipping bill, the lower of the 2 values would be taken into account for granting the refund.

Q: I want to return to India and set up a food processing unit. I am told that certain states are giving attractive concessions. Is any information available in this regard?

A: Many state governments are setting up food processing centres and mega food parks. Special emphasis is given to increase production of pulses, some of which are being imported into India. The mega food parks will become hubs for processing of fruits and vegetables. Special zones are also being set up for fisheries and for dairy, poultry and meat processing activities.

The Tamil Nadu government will soon enact a law to permit contract farming. The state government has agreed to switch over to the revenue sharing price fixation model, under which farmers will be assured of a fair and remunerative price. Further, they will be entitled to receive a share of the profits in addition to the FRP. The government will procure different pulses directly from the farmers at the minimum support price. Therefore, food processing units would be assured a steady supply of raw materials with remunerative prices being paid to producers.

The writer is a practising lawyer specialising in tax and exchange management laws of India. Views expressed are his own and do not reflect the newspaper's policy.