New Delhi, April 15 -- Investors are allowed to transfer equity shares or mutual funds to family members, but the tax treatment differs from that for transfers to non-family members. In general, asset transfers in India, such as sales or exchanges, are treated as capital gains and are taxable in the year of transfer.

Taxation on the transfer of equity shares or mutual fund holdings depends on whether the transfer is made to immediate relatives, such as spouse, parents or children, according to Sourabh Tyagi, an accounting analyst. In such cases, if the transfer is made without consideration, it is generally treated as a gift rather than a transfer, and no capital gains tax is applicable, he said.

This exemption falls under Section 47 of...