Tax treatment for Sender
If you gift shares to your wife, it shall be considered as a ‘transfer’ and thus Capital Gains would arise. However, Section 47 of the Income Tax Act specifically excludes ‘gift’ from the definition of ‘transfer’. Thus, the sender of the gift is not liable to pay income tax on such transactions.
Tax treatment for receiver
On the sale of shares, Capital Gains would arise.
If shares were held for more than 12 months from date of purchase by previous owner (husband) to date of sale, LTCG or else STCG
- Purchase Date = Date of purchase by the previous owner
- Purchase Value = Purchase Value of the previous owner
- Tax Liability = 10% under Section 112A since STT is paid on purchase and sale