Hi All and @Quicko , I transferred some shares from my demat account to my spouse’s in last financial year. She has not sold any shares, but received dividend as and when distributed by the company. Please help me with my following queries -
Do I or my spouse need to show this “share transfer” in our ITR forms? If yes, pls let me know where should I mention it in Quicko’s webform.
Is that dividend earned by my spouse, actually needs to be shown in my ITR and I need to pay tax on that instead of my spouse?
If you gift shares to your spouse, there is no capital gains tax just because you transferred the shares. Gifts between spouses are also not taxed as gifts.
Also, any income from those shares, such as dividends or capital gains when your spouse eventually sells the shares, will be taxable
Transfer of shares as a gift to the spouse is exempt from Income tax so you can report it under schedule of exempt income while fiLing ITR.
As per section 64 of Income tax act income earned by your spouse from the gifted shares will be clubbed into your hands and would be taxable in your ITR.
From a tax perspective, a transfer of shares to your spouse should generally be disclosed as a gift/transfer, although a genuine gift between spouses is not taxable in the recipient’s hands at the time of transfer. However, the dividend income arising from those shares is generally subject to the clubbing provisions, so it may need to be included in the transferor’s taxable income rather than the spouse’s. The exact ITR disclosure depends on the transaction and circumstances.