Tax on shares received as a gift

Income Tax Income from Capital Gains
71

In my case, who should show the capital gain in itr me or spouse?

72

@mahendraghat, if you transferred the ownership of shares by way of gifting them to your spouse, and they sell it - they would have earned the capital gains and should be reported by them when filing the ITR.

73

Hi…
I like to transfer some holdings to my brother’s daughter Demat account from NSDL ( Stock Holding Corporation of India Ltd.,)

Found two similar options under reason for transfer.

  1. Gift
  2. Transfer between specified family members
    (self and spouse linear ascendants/descendants )

Can anyone please share what is the difference (which is probably tax related only)…

74

Hi @Desabandhu_Realtors, there shall be no tax implication if you choose to gift the holdings to your brother (relative). However if you choose to transfer the holdings (between specified family members) it would be taxed under Capital Gains. Let me know if you have any further queries. :blush:

75

Hey @Sourav_Saha

Tax Implication on receiving shares as gift
Since the shares are received as a gift from the husband who falls under the definition of a relative, such a gift is exempt in the hands of the wife.

Tax Implication on Pledging of Gifted Shares
There would be no tax when the shares are pledged. The income or loss from intraday trading and F&O trading will have the following tax implication:

  1. Profit from intraday or F&O trading is taxed at slab rates.
  2. Income from trading is to be reported as business income and you must file ITR-3.
  3. Loss from intraday trading is a speculative business loss and can be set off against other speculative business income. The remaining loss can be carried forward for 4 years.
  4. Loss from F&O trading is a non-speculative business loss and can be set off against any income except Salary. The remaining loss can be carried forward for 8 years.

You can read more about it here

Clubbing of Income

Since you had gifted the shares to your wife and the income from trading arises from such gifted asset, such income will be clubbed in the hands of the sender of gift. Thus, the income from trading shall be clubbed in your hands as per the provisions of clubbing of income as per Section 64.

76

For example, I have 1000 okay shares of XYZ company, and I want to give it to my father. Once my father receives these shares can he gift some shares out of these 1000, say 500 shares to someone else or relative or to my mother? What about the dividend income, who will receive that Dividend income my father (receiver) or me [sender].

77

@Sakshi_Shah1 can you please help?

78

Hello @Kiran_Mane

Yes. Your father can further gift those shares. However, the tax treatment for sender and receiver of each gift must be checked. You can read more about it here

The dividend will be credited to the demat of the owner of the shares. However, the taxability of dividend would be as per provisions of clubbing of income.

79

Do we have any particular format for the gift deed? If anyone can share the gift deed format, that would be great.

81

Hello @Aswath

A gift deed format includes the following details-

  • Donor and Donee
  • Consideration
  • Voluntary Transfer
  • Ownership of Property
  • Property Details
  • Rights of the Donee
  • Acceptance by Donee
  • Delivery
  • Witnesses
  • Revocation
82

can gift be revoked ?

83

Hello @HIREiN

A gift may be revoked only by a mutual agreement on a condition by the donor and the donee, or by rescinding the contract pertaining to such gift.

The gift deed need not have a revocation clause of the gift property, but it is advisable to avoid any conflict in the future.

84

as far i know ; as the the law ; gift , once given ; can’t be asked back !

85

@Sakshi_Shah1 can you help?

86

Thanks. I believe Gift deed is like a document, so from where can I get the same?

87

Hi @HIREiN

As per the Income Tax Act, there are provisions for taxation on gift for both sender and receiver. However, any other applicable law for gift must be referred to in case you’re planning to give gift or revoke the same. If a gift deed has been prepared, the provisions of the same shall apply to the gift transaction.

88

Hi @Aswath

Ideally, a gift deed must be prepared by a legal advocate or lawyer based on the provisions that the donor and donee want to include in the agreement. However, you can find a sample gift deed format online on any of the lawyer/advocate websites.

For any help regarding taxation on gift, feel free to reach out to us.

89

When one gifts shares/stock to a relative, as per the forum, there is no tax liability to both the doner and the donee. If the donee is also a tax payee and dividends are distributed on the gifted stock, who is liable to pay the tax on the dividends, doner or donee?

90

Hello,

I have transferred shares worth 20lakhs to my wife’s account as gift. She is not liable to pay any tax on this gift. When she sells these shares, the capital gain generated from the sell value at that time and buy value from the day ut was originally purchased by me. She would be liable to pay taxes on these. Please correct if my understanding is wrong. The buy value will not be the closing price on the day shares were transferred to her, but the original buy price on which they were purchased by me.

91

Hey @sushant_arora

You’re understanding is absolutely correct.

Cheers!!