Transfer of units by unit holders on consolidation of plans within a mutual fund scheme not to be regarded as transfer [Section 47(xix)]
Effective from: A.Y. 2017-18

(i) Exemption for consolidation of mutual fund schemes:
Under section 47(xviii), any transfer by a unit holder of a capital asset, being a unit or units, held by him in the consolidating scheme of a mutual fund, made in consideration of the allotment to him of a capital asset, being a unit or units, in the consolidated scheme of the mutual fund is not regarded as a transfer and is, hence, not subject to capital gains tax.

(ii) Consolidation of mutual fund plans within a scheme: SEBI guidelines SEBI has also issued guidelines for consolidation of mutual fund plans within a scheme, on account of which, the tax exemption under section 47, available on merger or consolidation of mutual fund schemes has been extended to the merger or consolidation of different plans in a mutual fund scheme.

(iii) Exemption of transfer of units in the consolidation of Plans within a Mutual Fund scheme: For the purpose of facilitating consolidation of mutual fund plans within a scheme in the interest of the investors and to provide tax neutrality to unit holders upon consolidation or merger of mutual fund plans within a scheme, new clause (xix) has been inserted in section 47. Accordingly, any transfer by a unit holder of a capital asset, being a unit or units, held by him in the consolidating plan of a mutual fund scheme, made in consideration of the allotment to him of a capital asset, being a unit or units, in the consolidated plan of that scheme of the mutual fund shall not be considered transfer for capital gain tax purposes.

(iv) Meaning of the following terms:

Term	Meaning
Consolidating Plan	The plan within a scheme of a mutual fund which merges under the process of consolidation of the plans within a scheme of mutual fund in accordance with the SEBI (Mutual Funds) Regulations, 1996 made under SEBI Act, 1992.
Consolidated Plan	The plan with which the consolidating plan merges or which is formed as a result of such merger.
Mutual Fund	A mutual fund specified under section 10(23D), i.e.,   (i) a Mutual Fund registered under the SEBI Act, 1992 or regulations made thereunder;   (ii) such other Mutual Fund set up by a public sector bank or a public financial institution or authorised by the RBI and subject to conditions notified by the Central Government.