Tax on dividend generated from stocks gifted to parents

I fall in a higher tax bracket and I’m yet to receive dividends (of order of thousands) from certain stocks.
I want to decrease my tax liability by gifting stock to my parents. How the dividend generated from those stocks would be taxed?
I’m assuming that dividend would be taxed in hands of my parents and I would not have any liability on it after gifting. Is my assumption correct ?
Ps- I would be using gift stocks feature from Zerodha.

@Kaushal_Soni @Saad_C @AkashJhaveri @Divya_Singhvi @Laxmi_Navlani can you help with this?

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Hi @shivankgarg98 ,

Clubbing provisions are applicable when an asset is transferred to spouse/minor child for no consideration/inadequate consideration and henceforth the income arising from such asset is taxable in the hands of the donor.

However, in your case as you are gifting the stocks to your parents there would be no clubbing provisions applicable and capital gains tax will be applicable when the shares are sold further by your parents.

Hope it helps!

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Thanks tax qna team.

“capital gains tax will be applicable when the shares are sold further by your parents.”

Capital tax would be paid by my parents or me?

Hey @shivankgarg98, capital gains tax would be paid by the person selling those shares. So, if your parents sell those shares, tax will be payable by them.

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