Capital gain on sale of shares received from father.

This query is : Resolved

CA. Jitendra S. Patankar (Querist)
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12 September 2012 Hi,

If a major person sells shares which were transferred off market from his fathers account without consideration within a year of transfer what is the cost of acquisition taken. Is it the COA when father purchased, market value on transfer or Nil.

As tax planning, is it advisable to transfer shares from fathers account or is it better to sell the holding and buy again in new account at current prices.

Will it make any difference if father is second holder in the new account to which the shares are to be transferred.

Please Suggest what to do.

CA Amit Rajput

CA Amit Rajput (Expert)
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12 September 2012 Under income tax act

where any property is transfered from father to his son than cost to the previous owner i.e. cost to fathre becomes cost to son and any sale proceds received on sale is deducted from cost of securities purchased by father.

As it is advisable to sell shares from the account of father because benefit of indaxation is avilable to son from the dste of transfer to the date of sale of securities.And to father from date of purchase till the date of actuale sale if shares sold from fathers account in case of unlisted.

and for listed securities holding period exceeding 12 months will be considered as long term and LTCG become exempted in case of STT is paid and shares sold via stock exchange.

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