Resident Mom gifting Shares to NRI Son holding non-pis account

Taxation
1

I’m a resident Indian and wanted to gift the shares worth 15L to my first son who is an NRI and holding non-pis account with Zerodha.

  1. Is it legal and allowed?
  2. Do I need to pay any taxes?
  3. My son will attract any taxes?
  4. How to do this gift transfer from Zerodha?
  5. Any other legal/tax complexities?
2

@Quicko can you assist, please.

You can follow the steps given here to gift the shares.

3

@ShubhS9 - Thanks for the quick reply. So the process of gifting shares are same as to an resident account.

Charges mentioned are “₹25 or 0.03% per stock, + 18% GST whichever is higher, is applicable.” The 0.03% per stock is on the avg. buying price or on the current market price?

@Quicko - Please help on above queries.

4

This are applicable on transfer value, so CMP * Quantity.

1 Like
5

I was also looking into this. I found this article which suggests this is possible but requires RBI approval. I’m not sure if this rule is for Non-PIS accounts or PIS accounts.

1 Like
6

@ShubhS9 - Can you please confirm prior RBI approval is required for transferring shares from Resident to NRI’s non-PIS demat account?

If yes, please let me know the procedures to get the approval from RBI?

7

Hey @gajofe1730,

Yes, you can gift shares to your son.

Gifts from relatives are exempted from taxes in India. Hence, your son doesn’t have to pay any taxes in India when they receive such shares as a gift.

However, when these shares are sold, capital gains tax will be applicable depending on whether the gains are short-term or long-term.

Hope this helps!

1 Like
8

Thanks @Quicko & @ShubhS9 .

Can you please confirm on below.

  1. Pre-approval required from RBI to transfer shares from resident to non-PIS account? If yes, what are the procedure?
  2. Gifting shares in Zerodha is same for resident to resident and resident to non-PIS accounts?
9

Did you get an answer yet?

10

@Quicko IN THIS CASE SECTION 64 CLUBBING INCOME - IF SON SOLD SHARES THEN INCOME WILL BELONGS TO MOTHER…?

11

Hi @Trade_NRE,

Clubbing of income is applicable in case of minor child and spouse. In case the son is above 18 years of age, clubbing of income will not be applicable.

12

Also, I did a bit more research on this. The process is not well documented and there does seem to be some RBI approval required. Also, there seems to be a weird limit of $50,000 set in place which is separate from LRS? It is unbelievably complex because this could technically be used for tax avoidance since the NRI can leverage the DTAA to not pay tax on the final sale of these shares/funds/bonds.

It might be much easier to sell the shares and gift the proceeds by way of a Gift deed. You can then repurchase the same.