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Liability to taxes on transfer of shares as gift

jtreddy (articled student) (61 Points)

21 December 2007

Dear all

Please some body help me on the following topics

1.Liability to taxes on transer of shares as gift
2.can shares be gifted immediately before the transaction

its urgent please,

thank you.

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3 Replies

CA. Amit Daga (Finance Controller CA. CS. CFA. CIFRS. M.COM. ) (9017 Points)
Replied 21 December 2007

A capital gain will arise only on the transfer of a capital asset. Section 47 specifically provides that a gift is not a transfer except where the gift is of shares or debentures allotted under an employee stock option scheme. In your case, assuming that the shares do not contain shares allotted under employee stock option scheme, it can be said that no capital gains will arise on the gift. There is no limit, and no tax will be levied whatever may be the quantum of gift.

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(Guest)

There will be no Income Tax liability U/s 56 since the shares gifted is not a sum of money.

ajay mohanty (finance manager) (29 Points)
Replied 06 May 2009

Mr. Daga,

Can u please advise on the following:

Suppose A holds 5 lac equity shares in a pvt. ltd. company and wants to gift to another existing shareholder 2 lac shares. then is it a transfer u/s 47 . is it liable to CG Tax.