New Delhi, Aug. 27 -- Gifting a Systematic Investment Plan (SIP) can be a thoughtful financial present for occasions such as Raksha Bandhan. However, mutual fund regulations and income-tax rules in India prescribe a specific structure for such transactions to ensure compliance and determine the applicable tax treatment.

If your sister is an adult and the mutual fund folio is in her name, you generally cannot arrange for the SIP instalments to be debited directly from your bank account.

Mutual funds follow third-party payment restrictions. This broadly means that payments for an investment should come from the bank account of the first-named investor. In the case of a joint bank account, the first holder of the mutual fund folio must als...