POSTED BY March 21, 2011 11:40 am COMMENTS (4)ON
Recently I was trying to setup SIP for my son (10 years old) and my sister’s son (11years) from my mother’s account. The procedure is so complicated and almost impossible now.
My mother has got PAN and KYC etc and I thought of putting my son’s bank account in the main application form and my mother’s account in the SIP form. In spite of 3rd party declaration, it was rejected by Franklin Templeton. Hope the procedure is same for other MF houses.
I have already running two SIPs with DSPBR and HDFCMF with the above setup but it was started 6 months back. Due to recent changes this is no longer possible.
One other option is putting my mother as first applicant and my son as second applicant with EorS mode.
Has anyone done this recently? Kindly share your thoughts and let me know what other options I have.
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4 replies on this article “Grand-parents investing for Grand Child – Become so complicated”
Thanks, Appreciate your response.
Dear Dominic, From ease of operation, your 2nd option is OK but the taxation related problem ‘ll still be there in future – In case your mother is no more, Son is the sole owner of the investments, son is still minor & you are redeeming & there are some STCG, the fate ‘ll be the same for taxation as I discussed earlier.
Dear Dominic, In my view, you should not invest the way you are proposing. Why? my dear friend, you are inviting trouble for yourself. Your son is around 10Y now. if the investments done under his name are not performing well, you ‘ll redeem the same in future say after 3-4 years & even at that time your son ‘ll remain a minor. The LTCG & STCG thus ‘ll be added to your own income (not to your mother’s income) as you are the parent.
As of now LTCG from Eq. funds are non taxable but STCG are taxable in DTC like present system. Think.
In my view, you should invest under your mother’s name & your son as nominee.
“In my view, you should invest under your mother’s name & your son as nominee”
Yes I agree. Simple and straight.
Do you have any comments on my other option where my son as second applicant with EorS mode?