I am a stock trader by profession. Assume i received shares from my father to me as a gift. The cost price of the shares to my father is Rs. 12 Lakhs. The value of shares at the time of receipt by me is Rs. 14 lakhs (fair market value).
Upon receiving the shares, i used them for my trading purpose. Now, for the purpose of computation of income tax (as stock-in-trade), what should be the cost price that has to be taken by me. Was it the deemed cost price (Rs. 12 lakhs), fair market value (Rs. 14 lakhs) or since it is a gift in my hands (Rs. 0)?
The Cost of Shares in case of Gift is the Cost to the Earlier owner. (Deemed Cost) . In your case it will be Rs 12 Lakhs.
Know there are two diffrent treatments … One you keep t contiously as a Investment …Then Cost remain same and when ever you sell it … It will be covered under Captal Gains
When you convert the Investment in to Stock in Trade … On the day of conversion price and 12 Lacs here is Capital Gain and after conversion it comes under stock in trade which can be valued as Cost of market value which ever is less
Let’s say I have a 100 shares of xyz company in my portfolio and I want to gift those to someone who is not of legal age? What’s the procedure and what’s are the costs incurred by me and by the receiver and are the challenges for such a a tranasaction ?