Dear Experts,
I am thanking to all very much for information provided.
In furtherance, after going to relevant provision of Income Tax Act (given below) and applying it in my case, I came to conclusion, as given below. All are requested to go through it and let me know your opinion on my conclusion and correct me wherever necessary.
(1) As per S-2 (29A) of Income Tax Act, the term “long-term capital asset” means a capital asset which is not a short-term capital asset. And as per S-2 (42A) of Income Tax Act, the “short-term capital asset”, in the case of a security listed in a recognized stock exchange in India, means a capital asset held by an assessee for not more than twelve months immediately preceding the date of its transfer. Hence, securities held for more than 12 months are “long-term capital asset”.
(2) As per S-47 (iii) of Income Tax Act, any transaction of capital asset under gift is not regarded as transfer.
(3) As per S-56 (2)(vii)(c) of Income Tax Act, the Shares & Securities of any amount received from real / direct brother & sister is not taxable.
(4) As per S-2 (42A) Explanation (i)(b) of Income Tax Act, the date of acquisition of Shares will be considered as that held by the previous owner.
(5) As per S-10 (38) of Income Tax Act, such income will not included in total income which is arising from the transfer of a long-term capital asset, being an equity share in a company where such transaction is chargeable to securities transaction tax.
My Conclusions:
(a) Since my direct brother & sister are gifting Shares to me, hence as per S-56 (2)(vii)(c) gift of any amount is not taxable.
(b) After receipt of those Shares as gift by me, from my real brother & sister, as per S-2 (42A) the date of acquisition of Shares will be considered as that held by the previous owner i.e. my brother & sister from 1980 & 1990 only.
(c) As mentioned above in (b) since I will be considered to held Shares from 1980 & 1990, i.e. more than 12 months, hence as per S-2 (29A) & S-2 (42A) any gain from same would be long term capital gain to me even I sell it without holding it for one year.
(d) As per S-10 (38) long term capital gain, by paying STT, is not taxable.
(e) In view of aforesaid (a) to (d), if I dispose/sell Shares without keeping them for 1 year I will not have to pay any tax.
CAclubindia
