ITR 2025: Your mutual fund application could be rejected if you don’t complete...
New KYC norms linked with PAN and Aadhaar are now reinforced with Income Tax filing rules. Without completing upgraded KYC—especially Aadhaar‑based validation, your mutual fund investments may be refused. Here’s what you need to know:
‘Registered’ KYC Status Limits Transactions
If your KYC is only ‘Registered’ (non‑Aadhaar based), you’ll be allowed to invest in existing folios but new applications, like SIPs or lumpsum in different fund houses, will be rejected.
‘On-Hold’ or ‘Rejected’ KYC Locks All MF Activity
KYC flagged as ‘On-Hold’ (due to missing PAN‑Aadhaar link, unverified email/mobile, or incomplete documents) or ‘Rejected’ will freeze all transactions, including redemption.
Aadhaar-Based KYC Brings ‘Validated’ Status
An Aadhaar-based KYC, with verified mobile and email, gives you ‘Validated’ status, allowing free investment across all mutual fund houses
Re‑KYC Deadlines Started in April 2024
Regulatory mandates kicked in from 1 April 2024, requiring investors to upgrade to Aadhaar-based KYC. Those who did not are now facing transaction blocks.
NRIs Face Additional Hurdles
NRIs without Aadhaar remain at ‘Registered’ status and must often complete offline KYC (passport-based). Even with Aadhaar, overseas mobile numbers may complicate validations
Transactions Frozen Until KYC is Validated
Mutual fund registrars and platforms will not allow redemptions or SIPs until KYC is upgraded. This applies to both existing and new folios.
How to Upgrade Your KYC Status
To reach ‘Validated’ level:
- Link PAN with Aadhaar
- Verify mobile and email via OTP
- Update PAN‑Aadhaar‑name‑DOB consistency
- For NRIs, courier physical KYC with passport, PAN, and overseas address proof
Final Takeaway
KYC is no longer a formality, it’s an essential gatekeeper to mutual fund transactions. With new ITR norms tied to Aadhaar-PAN KYC, ensure your records are validated before filing your return or making any mutual fund moves.
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