Are there any tax implications when gifting mutual fund units?

Under Indian tax laws (Income Tax Act), gifts received from specified 'relatives' (as defined under Section 56) are completely tax-free in the hands of the recipient, regardless of the amount. However, if units are gifted to non-relatives and the aggregate value exceeds a specified threshold in a financial year, it may be taxable as income from other sources for the recipient. Additionally, clubbing of income provisions may apply if units are gifted to a spouse.