My grandfather has some shares in his name and he wants to transfer those shares to me.
I can not transfer those shares through a DIS slip due to some reasons, and will have to first sell them and transfer the proceeds to my account through a cheque and again, buy those shares.
I wish to know what should be the right course to avoid coming under scrutiny. And what documents should I maintain if any question arises, in future.
I am a professional with income less than 2.5 L and the share value is around 3 L. more
I can not transfer those shares through a DIS slip due to some reasons, and will have to first sell them and transfer the proceeds to my account through a cheque and again, buy those shares.
I wish to know what should be the right course to avoid coming under scrutiny. And what documents should I maintain if any question arises, in future.
I am a professional with income less than 2.5 L and the share value is around 3 L. more
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The sale proceeds would be taxed in the hands of your grandfather and not in your hands as the shares are in his name. So he has to determine his income. As far as gift is concerned, I do not know about the limits but I believe gifts to close blood relations are not taxable. You can confirm this fact from the PRO, Income Tax office or read the Income Tax Act. more
Mar 22
@Ashok sir, my income does not fall under tax bracket, and as a result, i do not file return. And the proceeds from sale of shares amount to be 3 L What should I do in this case? How much amount is exempt from tax if the the same has been given as gift? I came to know it is ₹50,000. Correct me if I am wrong. more
Mar 22
If your grand father has held these shares for more than one year, entire capital gains would be free from income tax. For this, you calculate the difference between purchase price and sale price and deduct brokerage etc. But make sure you sell the shares on NSE or BSE. Do not do any off market transaction. In the Income Tax return form under the section: Tax exempt income. Do the selling before March 31 as tax implication could have serious tax implications from April 1. This is because of the additional requirement of purchase leg of transaction also on which STT has been paid. Since your grand father has been holding these shares for a long time, some of these could be shares from IPO, rights, bonus etc on which STT is not payable. So from April 1 these gains would be treated like other long term capital gains - 10% tax without indexation & 20% tax with indexation. Mr. Jailtly has intentionally introduced this clause with the stated objective of controlling some crooks but it is going to hurt innocent investors hard. Though he promised a clarification would be issued, none has come so far. So you can guess that government intention is not good and they want to profit from this change. more
Mar 21
Thank you so much Ashok sir. You're a saviour. One last question - the total cash amount would be around ₹ 3L. Can you pl. tell me the tax implication on this amount? What is the exemption threshold? more
Mar 21
