If I am transferring shares to my family member what should I select as purpose in cdsl easiest?
Should I select ‘Gift’ or ‘Transfer between specified family member’. @Quicko
Thank you in advance
Transfer between family member.
@ashishram @tallerballer
At which step of transferring the shares this is filled in. Trying to recollect what did i added.
Can it be updated later
Even I don’t remember which step, but I filled transfer between family since it’s tax free…
CDSL reports to ITD and this comes up in AIS. If you put as gift, gift tax might come up unless you manually edit again.
So better to choose intra-family transfer since that’s tax free.
This is applicable only if the family member is allowed for tax free transfer as per IT laws. The list of eligible relatives is available online
It is when you select “setup” and select the stocks which you want to transfer it asks for purpose of transfer.
Ok. Thanks
Are you doing it from CDSL or from zerodha console
Don’t do from zerodha console. It marks as a gift and it is reported to ITD as the same, even when transferring within the family
And they mess up the buy price. They have implemented it very poorly
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When the ownership of shares changes, don’t you think, transaction can be either ‘gift to a family member’ or ‘sell’ ?? And there would be the tax liabilities on the person, who initiated the transaction ?
Thats great. wasn’t aware of that
If you have that procedure handy, can you share. Otherwise it should be in some post here
It is the nature and purpose of transfer that determines the taxation.
A transfer would be in the nature of a gift, if no consideration is involved.
U can gift/transfer the securities to a relative and such transfers will not be considered as sale.
(Have to refer to the list of people who qualify as relatives as per the IT act)
When such transfer is in the nature of a gift, The acquisition cost of the transferor, will become the acquisition cost of the transferee.
PS: Gifting of any securities without any consideration to any person not being a relative, would attract tax in the hands of the transferee.
Transfer to a non-relative that exceed ₹50,000 in value, would be taxed under income from other sources in the hands of the recipient.
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Family member transfer (as defined in IT law) is tax free irrespective of amount.
Sender doesn’t pay any tax. For reciever, he pays only when he sells. Buy price and date remains the same for the receiver
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@tallerballer I encountered the similar issue Zerodha gift feature with how the acquisition date and buy average is messed up with showing discrepancy and no option to edit the txn.
I wonder how the buy average and date are calculated when the transfer is done via cdsl, as I think it’s only the unit’s that gets transferred and not the buy price or data, is that right?
You can force Zerodha support to delete the values and then enter manually. They did it for me after I persisted. I was adamant and was ready to escalate to a SCORES complaint since it’s pure incompetency on their part. Zerodha is aware of the previous buy avg and time. It’s a gift from another zerodha member after all.
@nithin I hope you are aware of how many TaxP&Ls are messed up due to this, and the number of wrong tax payments and filings that your implementation causes.
The support was incredibly frustrating in this case. They kept stating I can file tax as I want with buy prices I like, as if I did not already know this. I wanted the correct values in console and my TaxP&L.
You have to manually enter in Console, as per data from old broker. It’s blank when you transfer and shows an error until you fill in the previous trades with date and buy price.
Lesson: Stick to CDSL transfer and put reason as gift or family transfer, instead of using Zerodha gifting feature
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Yeah, the current structure does not allow for covering all scenarios. @TheGouda @Ruchi_Porwal, what happened to our plans that give the option to select the acquisition price or the price as of the date of transfer when gifting the stock?
Hi Nitin, you should develop necessary and correct functionality in your structure regarding gift so that users don’t face any tax problem. And please also direct your support staff to take remedial steps immediately rather than to avoid the same. You have very good intentions but the same can be translated into action by your team members and your structure only.
Ajay Kumar
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As a platform, we had to take the most conservative taxation view, that is, the day of the price at which the transfer is made to be the gifting price. This is true for all cases apart from where you are transferring to immediate family, i.e. Wife/Husband, Mother/Father, Son/daughter, Brother/Sister. In this case, you can consider the price to be the acquisition price. This ability to enter both the acquisition price or the price of the date of transfer is complex and needs some work. It is on our list of things to do.
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This is wrong to my knowledge. Even if you are gifting to a friend, they will have the same buy price and buy date as you. They just have to pay tax on the gift when they receive it (“gift tax”). If relative, gift tax is skipped. Gift tax is outside zerodha.
From support
The holding period for determining the nature of Capital Gains, whether STCG or LTCG, would be determined from the date of acquisition by the previous owner until the date of sale. The capital asset acquisition cost would be determined as the previous owner’s purchase price to compute the capital gains.
This is irrespective of relative or non relative. I hope you now understand why this dumb implementation is frustrating since it violates tax laws and has lead to so many wrong tax filings.
This is already there. We enter it when we do a CDSL transfer. You have to enter this manually on Console. Not something new you have to implement
As you are aware, any gift to a person not covered under the term relative, will attract gift tax in the hands of the recipient.
This gift tax is paid by the recipient based on the market value of the securities on the date of transfer.
The cost of acquisition of a non-relative recipient will not be the orginal purchase price of the donor, rather the cost of acquisition of the recipient will be the market price prevailing on the date of transfer of gift, this is because he has already paid tax on the market price when receiving it.
So for non-relative the acquisition cost will have to be
Source? Where is this stated