Linking your permanent account number (PAN) to your Aadhaar before FY 2023 comes to a close on March 31, 2023 is important for your mutual fund. In addition, you will also have to submit the details of nominations of your mutual fund portfolio before the deadline. Failure to comply with these guidelines could lead to your mutual fund investments becoming frozen or inoperative.
PAN-Aadhaar Linkage Becomes Must For MF Portfolios
If your PAN is not linked to your Aadhaar by March 31, 2023, all financial transactions in your mutual fund portfolios will be prohibited from April 1, 2023 onwards. Effectively, transactions, such as fresh purchase, additional purchase, fresh systematic investment plans (SIPs) cannot be conducted without the PAN-Aadhaar linkage.
SIPs that have already running will also be stopped. Switching of funds from an investment scheme to another investment scheme will also be prohibited, without the PAN-Aadhaar linkage.
Submit Your Nominee Or Opt Out Of Nomination
Individual mutual fund unitholders can nominate a person to claim their units or the redemption proceeds thereof in the event of their death. When units are held by more than one person jointly, all joint unit holders can nominate a person to whom all rights in the units would transfer upon their death. They can also opt out of the nomination.
As of October 1, 2022, the Securities and Exchange Board of India (Sebi) has made it mandatory for all new unitholders to submit either the nomination form or the declaration that they are opting out of nomination.
Sebi has also made nomination mandatory for existing mutual fund folios, including the jointly-held ones. Existing folio investors who do not comply with this norm before March 31, 2023 will have their investments frozen and cannot transact in them.
Sebi observed that “some of our investors have not availed the nomination (opt in or opt-out) facility”. Neither nomination nor declaration of “Do Not Wish to Nominate” is not registered in the folio across all their investment(s) in mutual fund, Sebi said.
“In case, investors fail to add/update a nominee(s) for their investment or submit a declaration to opt out of the nomination by March 31, 2023, their folios shall be frozen for debit,” Sebi said.
Sebi has also directed all asset management companies (AMCs) to provide both an online and an offline facility to unitholders to choose their nominees or opt out of nomination. Unitholders can submit their choices in a specified form either with the fund houses, registrar, or the transfer agents.
Unitholders can also send a scanned copy of the form to the above-mentioned recipients. The nominations can also be changed in the investment accounts held with online platforms or by writing to the fund house.