Capital Gain Tax Computation on sale of shares

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This discussion explores the tax implications of receiving shares as a gift, holding them for less than 12 months, and then gifting them back. While the initial gift itself may not incur tax, the re-transfer could raise questions with tax authorities. The taxability of dividends received during the holding period also depends on whether the company has already paid Dividend Distribution Tax (DDT).

Sukanya Balasubramanian

Sukanya Balasubramanian (Querist)
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02 March 2020 I received shares from my co-brother as gift and received dividend too in holding period which was less than 12 months. Now within 1 year i gifted the same to him. What is the tax implication?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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02 March 2020 In my view the Gift does not attract any tax implication. However, the re-transfer may create some suspicious in the mind of tax authorities if such transactions come across in their notice. Dividend is also not taxable ,if the company has paid Dividend Distribution Tax (DDT) while distributing the dividends.