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Shares transferred from parents

Revanth (Job) (145 Points)

09 March 2015

I would like to know the trax treatment on the transfer of shares from parents to children out of will. Please note it is out of Will and is there any gift tax applicable on this transactions

Regards,

Revanth

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2 Replies

MAHESH (Tax Consultant) (114 Points)
Replied 11 March 2015

Dear Revanth,

As per current tax laws, if an individual receives cash or non-cash gifts from persons other than blood relatives* in excess of Rs. 50,000 in a year, the whole of such gift received will be treated as the individual's income and must be included under 'Income from other sources'. If it does not exceed Rs. 50,000, it will not be treated as income.

the following sources are tax exempt irrespective of amount received as Gift:

Any blood/close relative*Gifts received on your wedding
Gifts received by Inheritance or by Will
Gifts received from any local authority (state government and related establishments)
From any university, educational institutions, charitable institutions and other institutions referred under section 10 (23).

Gifts made to spouse, minor children and daughter-in-law for inadequate consideration will be deemed income in the hands of the individual making the gift.

You can gift movable property to your dependent major children (above 18 years age) and the income earned from such gift will be taxed in their hands, thereby lowering your tax liability.

*A close or blood relative would include any of the following:

Spouse of the individual
Brother or sister of the individual
Brother or sister of the spouse of the individual
Brother or sister of either of the parents of the individual
Any lineal ascendant or descendant of the individuals
Any lineal ascendant or descendant of spouse of the individuals
Spouse of the Brother / sister of individual or brother/ sister of spouse of individual