Tax liability on sale of gifted shares

Are grandfathering provisions available even if STT has not been paid as in the case of shares bought prior to introduction of STT?

For you to put that cost it should have been at that price some point in time before 2018.

I’m not saying they’re checking it like this, but it would be very easy to detect when someone puts a buying price of 1000 when stock has never gone above 950 before 2018

yes right understood

Hallo All, I have the following issue. Could anyone help?

  1. I gifted shares to my wife which she sold. Now, who has to pay tax for the capital gain.

  2. The shares i bought had bonus and split in the past few years. is there any way to check the original buy price for each share considering bonus and split? Shares were bought in the period from 2018 to 2020.

Thanks.

If the receiver of the gifted asset is a spouse or minor child, any income that arises directly or indirectly from such asset is clubbed with the income of the sender. @Quicko

For original trade details, you can check Console tradebook. But Corporate action adjustments should appear in your holdings breakdown, as shown below.

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thanks, it seems lot clear now. Another follow up question. My wife has no major income, and time being i work in europe. I use my income to invest/trade in my wife’s account.

I transfer from NRE account to wifes account for investing. How to do it properly to avoid income tax complications? Do i need to write some kind of gift documents? Thanks for your help.

To answer my own question, there are many articles if i google.

  1. if one invests in wife’s name, then income from that investment has to be added to husband’s income and tax has to be paid by husband.

  2. If wife’s uses that income to reinvest and any gain from that reinvestment is wife’s income and she has to pay tax subsequently.

Shortly, it is highly complicated. If the initial amount transferred by husband, generates income every year like FD, Bond, then every year it is reflected in wifes’s AIS statement but husband have to pay tax as per clubbing provision. At one point of time, it may lead to further complication.

@Quicko When gifting shares to Son(Major), whether Son has to mention these gift transfer in his ITR as exempt income? Even though he doesn’t sell the shares… Please advice.

Hey @satheeshb,

Gifts from relatives are exempted from taxes, however, you will have to report them while filing the ITR. You can report the FMV of such shares under Schedule EI (Exempt income) in the ITR.

Hope this helps!

Thanks @Quicko . FMV is the price when the share originally acquired or it’s the closing price of the day when the transfer happened?

Hey @satheeshb,

FMV or fair market value is the share price as on the date when such shares were gifted.

I have a question here…

Husband gifts stocks to wife, she sells it.
This would attract capital gains in the hands of husband due to the clubbing provisions.

Now, if wife uses the money from the selling of those shares to buy another shares or uses the amount in F&O, would gains/profits along with the re-invested capital from sold shares be taxable in the hands of the husband or the wife…??

Hey @Sura_88,

Any income arising from the reinvested gains will not be clubbed and your wife will be liable to pay taxes on the same.

Thank u @Quicko for your response…

By re-invested gains, u mean to say the profits+capital(earlier principal amount recovered after selling shares) or only the profits…???