Tax of Gift shares

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?

@Quicko can you.

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!

1 Like

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!

1 Like

@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 ,

  1. will the gifted shares are treated as sale ? i.e I no need to pay any tax on the gifting process right, even though I made profit / loss on my investment.

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.