Tax implications when transferring shares from individual account to HUF account held as a coparcener

Taxation
1

Hi,

What are the tax implications on:

  1. transferring
  2. sale of transferred shares

if I make a transfer of shares(unbounded capacity and/or amount) from my individual Zerodha demat account to an HUF account held by my father as the karta where I am one of the coparceners?

Please also suggest the optimal reason to quote when transferring the shares.

2

Hey @AakashVerma,

Such transfer of shares will be considered a gift and gift from members are exempted in the hands of HUF. However, when these shares are sold, clubbing provisions will be applicable and the member needs to pay taxes on the capital gains.

3

By members of HUF, do you mean the karta would have to pay taxes against whose PAN the demat account has received the shares?

To reconfirm, let me give an example. If I buy shares at 100 and transfer to it a HUF in my family whose karta is my father, will he pay tax on 80 rupees if he sells those shares at 180? In other words, is 80 rupees the total capital gain incurred on the transaction by HUF?

4

Hi @AakashVerma,

The income will be clubbed in the hands of the ‘member’ gifting the shares. The member may or may not be the Karta.