Cash transaction limit in case of trust?

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Querist : Anonymous

Querist : Anonymous (Querist)

24 May 2012 Please advice about, IF Mrs A given Gift Shares of 1.75 lacs (which purchased in f.y. 2003-04 )to his son in A. Y. 2005-06, cAPITAL Gain chargeable to MRS. A if she gives gift to her son and what effect of Tax on Gift received from mother to Major Son and gift received by major son is exempt from tax or not ?. what will be cost of acquisition for major son when it suppose sell SHARES in A.Y. 2012-013- fmv or purchase cost of shares by mother ?.what about index cost apllyed for gifted shares.

Querist : Anonymous

Querist : Anonymous (Querist)

24 May 2012 Respected Sir,

What is cash transaction limit in case of trust?
if it is more than Rs.20,000?

Thank you in advance

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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24 May 2012 Capital gain shall not arise when the shares are gifted.

Capital gain shall arise when the child sells such shares.

Treatment of such capital gain shall be as under:

1. If the gift is given to a minor child, then the capital gain shall be clubbed in the hands of the mother.

2. If the gift is given to a major child, the capital gain shall NOT be clubbed and shall be taxable in the hands of the child only.

There will be no tax implication in the hands of the child when he receives the gift as the same is exempted u/s 56.

Querist : Anonymous

Querist : Anonymous (Querist)

26 May 2012 please reply modified my quries.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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26 May 2012 First of all you should not modify your query. You should post a new query.

Anyways the answer is as under:

1. The gift is exempt in the hands of the mother and the son. There will be no taxability in either case.

2. When the son sells the shares, the capital gain shall be taxable in his hands.

3. The cost of acquisition shall be the cost at which the shares were acquired by the mother.

4. For computing period of holding, the holding period of previous owner shall also be considered.

5. Since the shares have been held for more than 12 months, indexation benefit shall be available.

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