Frequently Asked Questions on Axis Children's Gift Fund

Written on Friday, November 20, 2015
By Anjaneya Gautam- Sr. VP, Mutual Funds, Bajaj Capital Ltd.

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Axis Children's Gift Fund is an open ended balanced fund. The fund will invest in a mix of equity and debt instruments. The NFO of the fund opens on Nov 18 and closes on Dec 2, 2015. It will open for ongoing subscription from December 14, 2015. The fund aims to propagate its goal based investment approach by presenting an investment option catering to the goal of children's higher education and marriage.

 

1. Does CGF have a new & separate application form?

Yes

 

2. Scheme Options

There are 2 available options-

 

i. With Lock-in: Investment will be locked-in till the child is 18 years of age or 3 years from the date of allotment, whichever is later. Investment may be redeemed after lock-in. No exit load applicable.

 

ii. Without Lock-in: Can redeem any time, but with respective to Exit load. Please refer KIM for the same.

3% if exited within 1 year

2% if exited after 1 year but before 2 years

1% if exited after 2 year but before 3 years

No exit load post 3 years from date of allotment.

 

iii. Will the money automatically mature at the age of 18?

No. The folio would be under freeze on minor attaining Major status. SIP if any registered on the folio will stop as soon as the minor attains majority the folio would be unfreeze for redemptions / switch-outs on submission of minor to major documents.

iv. Can one do partial redemption?

Yes, subject to above sub-section (i) & (ii).

 

3. Systematic Investment Plan (SIP)

 

a. How do I enroll in through Systematic Investment Plan?

Fill up SIP Mandate along with Application form

 

b. Can I increase SIP amount at any point of time on or after a year?

No, Investor needs to stop the existing SIP and start new with increase amount, or register a separate SIP for the additional amount.

 

c. Till when shall the SIP continue?

Till the unit holder attains the age Major.

 

d. Can there be an intimation sent to the clients at the end of 15th year, such that all investments are free by 18 years of age?

45 days before minor attending the age majority intimation will be sent to investor requesting for necessary documents to change the status.

 

e. Can there be a waiver of lock in for SIPs and the entire amount should be available for withdrawal at 18 years of age?

No, in lock-in option every installment has to complete 3 years and for non-lock-in it is subject to applicable exit load.

 

4. Third Party Related

 

a. Can there be more than 2 donors in the same folio?

No. Only 1 donor allowed in one folio

 

b. Can Grandfather invest on behalf of grand child?

Yes, as Donor

 

c. Is there a gift tax angle to giving or receiving the Axis Children Gift fund, please explain?

Guardian/Donor has to consult his/her Tax consultant; AMC will not be deducting any gift tax on the investments.

 

d. What is the tax treatment for the Gift received by the Minor?

Guardian/Donor has to consult his/her Tax consultant; AMC will not be deducting any gift tax on the investments.

 

e. What is the limit of the Gift, if any?

No Limit on investment by any Donor.

 

f. Can a third party other than natural guardian invest in this scheme?

Yes, as Donor

 

g. Is there a third party declaration?

Yes, this is part of the Signature and Declaration section in the form Page 2

 

h. Can the third Party invest through DD?

Yes, with the Bank declaration for DD issuance.

 

5. Bank account related

 

a. Is it compulsory for the minor to have bank account, while investing?

No, however in the absence of minor bank a/c please provides the Guardian bank details. Please note at the time of redemption Minor’s Bank details are mandatory to release the redemption proceeds.

 

b. If the child does not have the bank account, during investment, whose bank accounts should be taken on the form?

Guardian bank account

 

6. KYC and FATCA

 

a. Is KYC and FATCA registration mandatory to invest in CGF?

Yes for Guardian and Donor

 

b. Whose KYC and FATCA- Child or guardian?

Guardian

 

c. What is FATCA?

A small note on FATCA - The Foreign Account Tax Compliance Act (FATCA) is a U.S. tax initiative that requires all financial institutions to report information (E.g. Name, Address, Date of birth, place of birth, Phone numbers, tax identification numbers, Account Number, Account Balance/Value etc.) to the relevant tax authorities about US accounts or accounts of certain entities in which U.S. persons hold a substantial ownership interest. If investor is a tax resident of any other country other than India then he/ she has to provide Tax Identification Number of their respective country.

 

7. Additional Purchase

 

a. Is additional Purchase possible in the folio of the CGF?

Yes.

 

b. Can the same donor again purchase units in the folio?

Yes.

 

c. Can the parents also purchase units in the same folio?

Only the guardian on the folio can make additional purchase in the folio.

 

8. Is it possible to have a joint account? Divide the investment amount to my 2 children

No.

 

9. Nomination Related

 

a. What is the process for nomination?

No nominee allowed in minor’s account

 

b. Who can be a nominee?

No nominee allowed in minor’s account, however there is an option to register an alternate child which will work as a nominee. The alternate child has to be younger than the unit holder.

 

c. What happens in case of transmission if there is no alternate child?

In the absence of alternate child proceeds will be released to guardian a/c on the submission of necessary transmission documents.

 

d. Does the donor have any say, on the investments, if the beneficiary child passes away?

No

 

10. Can the beneficiary / investor name be changed after the investment is made?

No. Since unit of mutual fund are not transferred therefore parent cannot change either beneficiary or investor name.

 

11. If the advisor invests for his minor child, in his own ARN, will he get the brokerage?

No

 

12. How to change the bank mandate of investor/beneficiary?

Existing COB process

 

13. List the valid supporting documents required while investing for minor

Aadhar card, Birth certificate, School leaving certificate, Passport and Any valid document issued by Govt Authority, etc.

 

14. What is the nature of CGF? What will be the tax treatment?

Same as open ended Equity schemes.

 

15. Dividend Reinvestment not available under the no lock-in option?

It is available only for No Lock in option however not available for Lock in option.

 

16. Can the Guardian be changed? What is the process to change the Guardian?

Yes with the below necessary documents as attached.

 

17. Why Alternate Child should be younger than the Beneficiary Child

In this scheme units can be allotted only to a minor, hence the alternate child has to be younger to the unit holder because at the time of transmission the units can be transferred as the alternate child is a minor.

 

18. What is Max SIP tenure?

Until the minor attains majority

 

19. What if there is only one Child and guardian wants to provide alternate Child details?

Guardian can provide the details of Blood relative child.

 

20. Can Minor’s Pan without Photograph considered as Valid Proof.

Yes.

 

21. Can Bank details (section 3 on the form) be of Guardian also?

Yes in case Minor’s bank account not available.

 

22. What in case of Transmission of units when there is demise of the unit holder under lock-in Period and alternate Child is not registered?

Units will be redeemed immediately on the submission of required documents and credited to the Guardian’s account.

 

24. What in case of Donor’s demise?

No effect in the folio but only in case of Lump sum investment and in case of SIP investment, SIP account will be ceased on the submission of the required documents.

 

25. Can Donor start SIP even if investment is made by Guardian?

“Yes”, maximum 1 donor allowed.

 

26. If investment is given by Guardian or Donor and Bank details given on the form is of Minor then Cheque leaf copy is Mandatory?

Yes, if bank details are different from the investment bank.     

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