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Capital gain

CA Abhishek Banka (Accounts & Finance Manager) (108 Points)

07 June 2012

I received shares as a nominee from my deceased relative. Now i am transferring the same shares offline to the same deceased relative say his daughter i.e transferring offline means there is no STT involved in it. Now i want to know the capital gain implication for the above transaction. Whether capital gain will arise or not, if yes in whose hand and what will be the cost of acquisition.

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3 Replies

CA Ganesh Agarwala (Audit Senior Manager) (239 Points)
Replied 07 June 2012

dear abhishek,

if you are transferring the shares as gift then such transfer is not considered to be transfer under 47 of the income tax act. as your cost of accuisition was the cost to the previous owner then there is no question of arising of capital gains in your hand.

regards,

ganesh agarwala

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Yogesh Kumar (Job) (180 Points)
Replied 07 June 2012

As replied by Ganesh is correct. In addition to that make sure that the received is covered under the definition of relatives and value of the transfer will be less than fifty thousands rupees otherwise it will be taxable in the hands of the reciver as income from other source
But if you are transfering for consideration then there will be either STCG/ LTCG and both are taxable in your hand.

Please note even its LTCG even then it will be taxable since you will not pay STT on the same.

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CA Ganesh Agarwala (Audit Senior Manager) (239 Points)
Replied 08 June 2012

dear abhishek,

as mr. yogesh coreectly pointed out, i did a blunder not pointing out the sec 56(2)(vii), where gifts are taxed.... in your case as you have inherited the property from your relative capital gain will not arise in your hand. but the same will be taxed in the hands of your relative to whom you are transferring if she does not come under the ambit of defination of relative to you.

regards

ganesh agarwala