Can Gifted shares be gifted back to the donor?

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This query is : Resolved

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A mother gifted shares to her daughters in FY 18-19 and now wishes to receive some back in FY 20-21. While the law doesn't explicitly restrict this, it's important to consider the intent behind such transactions. The consensus is that gifting shares back is permissible and treated as a fresh gift, with no tax implications as it's a gift to a relative.

sakshi jain

sakshi jain (Querist)

12 June 2020 Mother has gifted equity shares as gift in FY 18-19 to her 2 daughters, now she wishes to get a part of those gifts back. Is it legal to gift back the shares to their mother again in FY 20-21?

Act no where has a restriction? But does it raises a concern on intent of the transaction?
Has there ever been a case law supporting/rejecting such transaction?

Look forward to your responses.

Thanks
CA Sakshi

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

12 June 2020 Yes, it's legal to gift back the shares to mother again.
It will be considered as fresh gift. Gift to relative exempt. No tax implications or tax avoidance in such gifts, hence no problem.

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sakshi jain

sakshi jain (Querist)

12 June 2020 Thanku Sir for the response.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

12 June 2020 Welcome............

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