Hey Surbhi,
As per your articles
" 1. Exempt incomes: There are some incomes specified in the Income Tax Act on which you do not have to pay any taxes. This includes gifts, agricultural income, interest from government schemes like PPF and SSY, etc. However, even if you do not have to pay any taxes on these incomes, it is mandatory to report them in the ITR under Schedule EI (Exempt Income)."
Should this be done in the receiver’s ITR filing.
Hey @Punit_T
As rightly mentioned in the articles shared by @Surbhi_Pal, all incomes which are not taxable (exempt) needs to be disclosed in ITR in Schedule-EI.
Hope this clarifies. Let me know in case of further concerns.
Thanks,
CA. Pulkit Garg
-Lets say my friend Jay bought 1200 shares of ‘xyz corp’ at Rs 2lakh on Aug 2023.
-On 1st Aug 2024 (1 year after purchase), 2000 shares of ‘xyz corp’ are worth Rs 16Lakh.
In Dec 24, my wife gifted me some stocks through Zerodha gift system. Now these gifted stocks by my wife are showing in Tax P&L as Short term realised profit and Long term realised profit in her portfolio. As far as I know, there is no tax liability if shares are gifted to spouse. Still, if we have to pay the tax, the recipient of the shares has to pay it and not the person who has gifted it.
Is there anything we have failed to understand??
Hi @Nishant ,
The Tax P&L from Zerodha may reflect the gifted shares as part of their transfer of shares in the report, but neither you nor your spouse need to pay taxes on the gift itself.
Now, let’s talk about clubbing of income in case of gifted shares. These provisions apply when spouses gift shares to each other, and the recipient earns income (like capital gains or dividends) from those shares. If the transfer was made without consideration or for inadequate consideration, the income will be clubbed with the giver’s income.
In your case, when you sell the gifted shares, clubbing provisions will apply, and the capital gains will be included in your wife’s income and taxed accordingly in her ITR.
In other words, can short-term capital losses from a family member’s account be transferred through gifting and then used to offset and harvest gains in my account? I’ve found plenty of resources on the tax implications of gifting stocks and short-term capital gains, but I haven’t found anything specifically addressing whether losses can be transferred this way.
If I have realized short term capital gains (+2 lakhs) in my account and unrealized short term capital loss (-2 lakhs) in my my mother’s account. Can she gift the stocks to me so that I realize the loss in my account to bring my overall tax liability to 0?
In other words, can short-term capital losses from a family member’s account be transferred through gifting and then used to offset and harvest gains in my account? I’ve found plenty of resources on the tax implications of gifting stocks and short-term capital gains, but I haven’t found anything specifically addressing whether losses can be transferred this way.
Also please add the answer to the original article because even in this article, it’s only talking about gain, not losses as it will help everyone understand better.
So, as per the laws, any kind of gift received from your mother is exempt from income tax. Therefore, shares received as gift from mother will be tax-free.
Now, when you sell these shares you will have to calculate the profit or loss on the same. For this the purchase cost will be the price at which the original owner (mother) had bought the shares and the sale value will be the amount at which you sold the shares. The gain or loss on this sale transaction will be added or reduced from your income.
Hi , Kindly reply If I have realized short term capital gains (+2.5 lakhs) in my account and unrealized short term capital loss (-2.5 lakhs) in my son account who is dependent but major, 19 year old. Can he gift the stocks to me so that I realize the loss in my account to bring my overall tax liability to zero.
Hello @Sunil_Kumar ,
Yes, gift received from your son is exempt from taxes. The value of these gifted shares should be disclosed in the ‘Schedule Exempt Income’ of your ITR.
Also, if you sell the these shares, the capital gains or losses will be included with your other capital gains/losses. The purchase value in such cases will be the same as that of the person who gifted the shares.
Hope this clears your doubt.
Initially I invested in my friend’s Zerodha account as there was an issue adding my bank account to the Zerodha account. Later, my problem was resolved, and my friends are ready to transfer my part of the stocks to my zerodha account. She had chosen to move my stocks as a gifting option. Will I or she have tax implications even if I am not selling my stocks post transfer.
If the Fair Market Value (FMV) of the shares being transferred by your friend exceeds ₹50,000, it will be taxable in your hands under Section 56 of the Income Tax Act. Your friend will not have any tax implications on the transfer of shares to you.
Hope this helps!