Just have a look at the incident
Few months back Rajesh invested in mutual funds in the name of his minor son.Of course he paid through his bank account & his bank account get registered for the folio.Now recently after having some good appreciation he decided to redeem mutual fund & submitted the redemption request..
He received cheque mentioning payee name as :”Child name” Ref By “Fathers name” & having his bank account number printed on the cheque.
When Rajesh went Bank to deposit cheque,bank found the technical issue of name. Bank denied to accept the cheque as name on the cheque do not match as that with the bank account name..& now Rajesh regrets his decision of investing in the name of his miner son
Hopefully you have understood the technical issue.
Now Rajesh need to open a separate account for his miner son & guardian as his name.Then register this bank account with mutual fund folio & then request for reissue of check or direct credit in the new account.
So while investing in the name of miner one need to remember following things:
- Though you are investing your money in the name of miner child you are third party for mutual funds.
- If there is any short term / long term income then this income will get added in the either parents income having higher income so one can not invest in the name of miner just to save the tax.
- After child attains majority,he will be the owner of mutual fund units.
- You can face technical issue while redemption as above & you need to take necessary care about it.
