To save tax people gift shares but there is also a option available for transfer shares to specified family members… difference and tax applicability
Hello @Shivam_Suhane,
In order to gift shares, you’ll have to transfer those shares from the broker’s platform. If you transfer shares as gift to “relative” as per the income tax act then such a transaction won’t attract any tax liability. When the transferee sells those shares at that time capital gains will be taxed.
Hope this helps!
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Hello… Namaste…
Was trying to transfer some holdings to my brother’s daughter account over CDSL easiest. Found two similar options under reason for transfer. “Gift” & “Transfer between specified family members”
Can you please clarify - what is the difference between “Gift” & “Transfer between specified family members” (which is probably tax related only).?
If one select “Transfer between specified family members” as next step one has to select “Relation” ( drop down window) in which brother’s daughter is not mentioned. ( Only “Spouse”, “Father”, “Mother”, “Son”, “Son’s wife”, “Daughter”, “Daughter’s Husband”, “Brother”, “Sister”, “Member of same HUF”
Can you please help me how to transfer certain shares to my brother’s daughter from cdsl easiest online platform?
Regards,
Hello… Namaste…
Thanks for the reply…
can you please clarify, who will be taxed for capital gains ( sender or receiver) ?
what is difference between “Gift” and “Transfer to specified family member” ?
Regards,
Hello… Namaste…
Was trying to transfer some holdings to my brother’s daughter account over CDSL easiest. Found two similar options under reason for transfer. “Gift” & “Transfer between specified family members”
Can you please clarify - what is the difference between “Gift” & “Transfer between specified family members” (which is probably tax related only).?
If one select “Transfer between specified family members” as next step one has to select “Relation” ( drop down window) in which brother’s daughter is not mentioned. ( Only “Spouse”, “Father”, “Mother”, “Son”, “Son’s wife”, “Daughter”, “Daughter’s Husband”, “Brother”, “Sister”, “Member of same HUF”
Can you please help me how to transfer certain shares to my brother’s daughter from cdsl easiest online platform?
Regards,
Hello @Desabandhu_Realtors,
As per section 56 of the income tax act, a brother’s daughter is not covered under the definition of relative. If you transfer shares to specified family members then it is exempt from tax, while if you gift shares to a person other than a relative then up to INR 50,000/- it is exempt. So if you transfer the shares to her and the value of the transaction is more than INR 50,000/- then it will be taxable under IFOS for her.
For better understanding, you can refer to this article as well: Tax on Gifted Shares & Securities - Learn by Quicko
Hope this helps!
Hi Madam Thanks for the reply
A clarification requested madam…
Is it not my brother’s daughter who receives shares from me, receive from a “relative” as per income tax act? { because she receives from her father’s brother that is me in this case}
Exemptions under Section 56 (2)(x)
In case if a relative offers a gift, it is exempt from tax under Section 56(2)(x). According to the ITA, the following persons are considered relatives: spouse, brother/sister, brother/sister of the spouse, brother/sister of either of the parents, any blood relative/offspring, any blood relative/offspring of the spouse, spouse of the individuals referred above. For a Hindu undivided family (HUF), any member thereof.
Regards, and thanks in advance
Hi Madam Thanks for the reply
Only to clarify a point, I am raising the doubt please
She is receiving shares from her father’s brother. Is it not her relative as per Income Tax Act madam ?
Exemptions under Section 56 (2)(x)
In case if a relative offers a gift, it is exempt from tax under Section 56(2)(x). According to the ITA, the following persons are considered relatives: spouse, brother/sister, brother/sister of the spouse, brother/sister of either of the parents, any blood relative/offspring, any blood relative/offspring of the spouse, spouse of the individuals referred above. For a Hindu undivided family (HUF), any member thereof.
Regards, and thanks in advance
Hello @Desabandhu_Realtors,
Definition of Relative as per income tax act does not include Lineal descendant of Individual’s brother.
Hope this clarifies your doubt!
Here is the meaning of relative as per the Income Tax act:
(i) spouse of the individual;
(ii) brother or sister of the individual;
(iii) brother or sister of the spouse of the individual;
(iv) brother or sister of either of the parents of the individual;
(v) any lineal ascendant or descendant of the individual;
(vi) any lineal ascendant or descendant of the spouse of the individual;
(vii) spouse of the person referred to in clauses (ii) to (vi)
Hi,
If I gift Shares to spuse, I know any Capital Gain on sale of shares is Taxable in my hand.
However, This capital gain will be her income which she can continue to invest.
Ex. I have bought xyz at 100 rs. I gift it to my wife when price was 150. When she is selling it, it’s price is 175.
So, there are 2 components.
- My original investment which is 100 rs.
- LTCG of 75. I pay tax of 7.5 to it due to clubbing provision.
There arrises complexity where she will be having 2 income. She is free to reinvest 75 rs which is taxed to her. But she also has 100 rs of mine. Whatever she invest and earn will be taxed by clubbing provision. it will be difficult to break it down.
Question:- Will there be any issue of circular transaction if I gift her shares at 175 and she returns back 100 rs to me.
Regards,
Nilesh
If you gift shares to your spouse, the capital gain on the sale of shares will be taxable in the hands of your spouse, ie, the receiver of the gift.
Yes, this capital gain will be her income which she can continue to invest. For the purpose of computation of tax, the date of purchase & the purchase value, will be the date when the sender (you) has purchased the shares at the purchase price.
The transfer of shares to the spouse is an exempt income in the hands of the receiver hence she has only one income from the sale of shares.
If your spouse transfers you some amount, it will be an exempt income in the receiver’s hand, as a gift from a spouse is an exempt income.
Here’s a read on Tax on Gifted Shares & Securities - Learn by Quicko for your reference.
I need to transfer my equity share holding to my wife’s demat account for simplicity reasons, since I handle all our investments, can I do that? Will there be any tax implications?
Yes, you can transfer the shares from your account to your wife’s demat account.
Here’s a read on Tax on Gifted Shares & Securities - Learn by Quicko for your reference.
I gift my wife shares which she then pledges and uses the margin for writing options. If profit is incurred will this be treated as my income or my wife’s. Will the provisions of clubbing of income apply here?
Hi @gt77
According to the Income Tax Act, if income from assets that the taxpayer transfers directly or indirectly to the spouse without adequate consideration, then there are different consequences. You can read the same in the article attached here.
Hope this helps.
It person Mr.A own property value rs:60 lacs transferred to Mr. B and another date Mr.B own property value rs:85 lacs exchange (transferred) to Mr.A.
Question:
Above exchange transactions capitalgains and sec 56(2) applicable in it act.
In this situation, there is a capital gain happening. Hence capital gain u/s 45 shall be applicable
Section 56(2) of the Income Tax Act lays down provisions for tax on gifted shares.
Hello Team,
My Brother-in-law got IPO allotment of SME Share on 15th December 2022. He transferred these shares to me on 7th January 2023.
(i) Purchase Price - INR 157 @ 800 Shares = 122,400
(ii) Purchases Date - 15 December 2022 (since this was an IPO allotment, no STT was paid)
(iii) Sale Price - INR 118 @ 800 Shares = 94,400 (Sold by Receiver, paid STT)
(iv) Sale Date - 9 January 2023
(v) Loss - INR 28,000 (on the original allotment price of INR 157)
**(A) Can I (Gift Receiver) offset this loss against my profit for calculating STCG tax obligation. For example, if I already have STCG of INR 1,00,000, can I offset loss of INR 28,000 against this profit?
**(B) Shares received as Gift from my Father/Mother would be treated in the same way?
**(C) What would be the tax treatment for receiving shares from my wife and selling the same in loss…can i offset this loss as well against profit in my account?
Thanks