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Should I Use Transfer or Gift to Move Shares to My Father?

Mihir Tanna | Answer |Ask -Follow

Tax Expert - Answered on Aug 31, 2024

Mihir Ashok Tanna, who works with a well-known chartered accountancy firm in Mumbai, has more than 15 years of experience in direct taxation.
He handles various kinds of matters related to direct tax such as PAN/ TAN application; compliance including ITR, TDS return filing; issuance/ filing of statutory forms like Form 15CB, Form 61A, etc; application u/s 10(46); application for condonation of delay; application for lower/ nil TDS certificate; transfer pricing and study report; advisory/ opinion on direct tax matters; handling various income-tax notices; compounding application on show cause for TDS default; verification of books for TDS/ TCS/ equalisation levy compliance; application for pending income-tax demand and refund; charitable trust taxation and compliance; income-tax scrutiny and CIT(A) for all types of taxpayers including individuals, firms, LLPs, corporates, trusts, non-resident individuals and companies.
He regularly represents clients before the income tax authorities including the commissioner of income tax (appeal).... more

Question by bulk on Aug 30, 2024Hindi

Money

Shares transfer within family : On CSDL Easiest i am trying to transfer shares to my father so no tax implication ( tax only when my father sells shares) option 1 is Transfer between specified family member and then sub option father Option 2 Gift and no sub option ( free text ) . Which option to chose so its considered as transfer to family with no tax implication ( tax only when receiver - my father sells based on the profit )

Ans: Shares transferred by son to father without consideration with gift deed will not be considered as income in the hands of father.

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.

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Asked by Anonymous - Jan 16, 2024Hindi

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My father wants to transfer shares worth 30Ls to me. My questions are : 1. Is this taxable? i.e If I sell and I withdraw money after transferring to me? 2. Is it taxable, If my father sells and give me money as gift? I would prefer to keep 25% shares and sell the rest so that I can raise money and repay my home loan.

Ans: Transfer of shares by father to its son under gift deed will not be considered as income and accordingly not taxable. When son transfer shares, cost and period of holding of father will be considered for calculating Income from capital gain.

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Asked by Anonymous - Aug 31, 2024Hindi

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Like you clarified that shares should be transfered with gift deed to father to avoid tax on receiver hand ..what about online money transfer as GIFT to father does this also require any gift deed to avoid tax say 50 Lakh transfer or or in can simply transfer money online

Ans: Yes, it is advisable to execute gift deed for any mode of gift given to defined relatives.

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Question by saurabh - Sep 16, 2024Hindi

Money

Dear Sir/Madam, My father is 80 Years old retired pensioner from Central Govt department. He is having one ancestral property which is being sold with Amount Rs.29lacs Approx. Now he want to transfer this amount equally between 2 Sons. Please advise how to handle this entire transaction process to avoid any tax implications from both end. One of his son having home loan running and currently under tax slab of 30% and other one is under tax bracket of 20% but not home loan in his name yet only Personal Loan and Car loan. Please guide. Hope I can able to explain the situation up to some extent.

Ans: 01. In absence of information, I suppose the property being sold is a Long Term Capital asset.
02. Please work out Cost of ancestral property, so that you can work out Capital Gain on it, after reducing the same from sale amount of Rs.29.00 lakhs.
03. LTCG will be taxed @12.50% with Indexation or @20.00% with Indexation. You can choose the option, where the LTCG is less.
04. Your father can Gift the amount to both sons without any tax implications. The Gift should be by cheque or online transfer and not in cash. Better if proper document for gift is prepared.
05. Both sons may use the gifted money in the way they like, including re-payment of loans, either housing or other loan.
Most welcome for any further clarifications. Thanks.

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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