How are shares gifted to your partner taxed?

I wish to present my spouse shares value ₹4 lakh. Who will bear the capital positive factors tax in that case?

—Akash Jain

Any present of shares to a specified relative doesn’t entice tax within the fingers of recipient. As partner of a person falls underneath the outlined ‘relative’, there is not going to be any tax implications in your spouse’s fingers on account of receipt of shares as present from you.

However, because the shares are completely funded by you, in case your spouse subsequently sells the gifted shares (leading to capital positive factors or loss) or earns any dividend from the shares, clubbing provisions underneath the earnings tax legislation shall be attracted. Accordingly, any capital positive factors/ losses arising to your partner from sale of the gifted shares can be clubbed in your earnings and taxable in your fingers. The tax implications in your fingers would proceed to rely upon components equivalent to interval of holding, whether or not these are listed or unlisted shares, and many others.

I purchased a DDA flat in 1989. In the occasion of my dying, my son will inherit it. If he decides to promote it, what would be the tax liabilities, together with capital achieve, on the proceeds obtained by the use of a cheque. What are the choices to avoid wasting tax?

—Gurcharan

Any achieve/ loss arising from sale of such inherited property by your son, shall be chargeable to tax as ‘capital gain/loss’ in his fingers within the yr of sale.

Where the property has been held for greater than 24 months previous to sale, the identical can be thought of as a long-term capital asset and any achieve / loss arising from its sale shall be thought of as long-term capital achieve/loss (LTCG/ LTCL). For calculating the interval of holding of such inherited property, the tenure for which the property was held by you shall even be included.

LTCG can be calculated because the distinction between the sale consideration and listed price of acquisition and enchancment. Cost of acquisition within the fingers of your son shall be the precise price of the property in your fingers as elevated by any price of enchancment if any.

As the property has been acquired previous to 1 April 2001, the honest market worth of the property as on 1 April 2001 or the unique Cost of acquisition and enchancment, as per possibility of taxpayer, shall be thought of for the aim of indexation and computing capital positive factors. LTCG is taxed on the fee of 20%, plus relevant surcharge and cess.

In case of LTCG from sale of residential property, the next exemptions could also be availed by a person taxpayer:

Under part 54 of the Act—by investing the LTCG in buy or development of a brand new residential home located in India. Additional situations associated to interval of funding, quantity of funding, variety of properties already held, sale of latest asset, and many others., must be complied with.

Under part 54EC of the Act—By investing the LTCG in specified notified bonds (as much as a most of ₹50 lakh). Additional situations talked about above must be complied with.

Parizad Sirwalla is companion and head, international mobility providers, tax, KPMG in India.

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Updated: 06 Aug 2023, 09:56 PM IST