Hi, if I received shares as a gift in my zerodha account from my father’s zerodha account so the taxes will be applicable on my profit amount or the whole amount in my portfolio?
Suppose I received shares as gift on 1st of Jan, 2021 of Rs. 200000( 2 laks) and I’ll sell it after 4 year on 1st Jan, 2025 with profit of Rs. 200000 ( 2 laks) so tax will be applicable for total 4 laks ? Or only for the profits of 2 laks?
Hey @shivam_ram
As per section 56(2)(x) of income tax act, if gift is received from relative then it is entirely exempt from tax in the hands of recipient. Further, the capital gain tax will be applicable at the time of selling the shares by the recipient and exempt in the hands of transferor.
Also, cost of acquisition to be taken from previous owner to compute capital gain tax liability. Hence, in your case capital gain tax will not be applicable on 4 lakhs.
You can refer below article for more insights about taxation on gifted shares:
Hope, it helps!
Hi @Quicko, Thanks for the detailed Info, so as per the blog If i gift stocks to my wife whatever the value (5L or 10L) is exempted from the tax for me right? Please clarify.
Hello @Prabhumr
There will not be capital gain tax on the hands of husband while gifting the shares to his wife as gifts from relatives are exempt.
Hope, it helps!
@Quicko , one Clarity is rquired . I understood that i can gift any amount and all the amount is tax free at the receivers end but at the senders end I have the following question
If I am gifting stocks to my wife ,
Hi @siva0, The Gift Tax Act (GTA) was abolished in 1988 and thus sender need not pay tax on gifts. 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 as per Section 64(1)(iv) & Section 64(1A) of the Income Tax Act.
You wouldn’t have to pay tax on the gifting process. You can read more on gifted shares in the articles mentioned below.
Hi @Quicko, can you please clarify who is considered a relative in these circumstances? My father had bought some securities in his brother’s name long back in 1990s; now my uncle (father’s brother) is gifting it back to my mother’s name since my father is no more.
The total transaction amount is well above 50000 and including this income under “income under other sources” will make my mother cough lakhs of rupees in tax as she will jump into 30% tax bracket. I would like to know if my uncle will be treated as a “relative” in this transaction. Please help me get more clarity on this
Hi @Vinay_T_M
According to the Income Tax Act, relatives include:
So, your uncle will be considered a relative for gifting, and no tax is applicable for the same then.
However, when your mother sells those shares, capital gain/loss shall be applicable.
super thanks for the quick reply. Can you also clarify if the gift amount has to be reported under “income under other sources” or not (I guess not after seeing the earlier response)?
and if indeed we have to report it as “income under other sources”, how can we show to the IT dept that this income is exempt under 56(2)(x)?
@Quicko
I am planning to transfer some shares from my wife’s demat account to my demat account, what will be the tax implications if i transfer back the shares to my wife’s demat account after 2 or 3 months within the same financial year. I know 1st transfer from my wife to mine is tax exempted but what about the 2nd transfer from mine to my wife of same shares? I have no plan of selling the shares at any point. The process may sound odd, but my situation warrants this. Other’s opinions are appreciated. Thank you
Hey @A_K_RAGHAVENDRAN,
As the transfer of shares is taking place within the family, that is between your spouse and you, it will be considered as a gift(in both cases) and there will be no tax implications on the same until the shares are sold.
Hope this clarifies!