Income tax for gift shares

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When gifting shares to your wife, there's no limit, and it's generally tax-exempt. However, if she sells them within a year, the short-term capital gains tax is your responsibility, as the holding period counts from when you acquired them. This is due to income clubbing provisions, meaning any gains or dividends will be assessed in your hands, even if credited to her account.

Karthik Rajendran

Karthik Rajendran (Querist)

15 May 2024 I am planning to gift share to my wife.
1. Is there any limit to gift share to my wife?
2. If my wife selling the shares with in one year, who is accountable for short term capital gain tax, me or my wife?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

16 May 2024 1. No limit, it will be tax exempt.
2. The holding period will count from the date of acquisition by you. As such it will be LT or ST including your holding period. The gain will be taxable in your hand, due to clubbing provision.

Karthik Rajendran

Karthik Rajendran (Querist)

11 June 2024 My wife is working woman. I don't understand your last statement, clubbing?

Additional question: Dividend will be credited in my wife account, it's taxable for my wife.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

11 June 2024 Section 64 (1) (IV) of the Income Tax Act deals with the direct and indirect transfer of assets to the spouse. In such case, even if the dividend is credited to wife's account, but it will be assessed in husband's hand.
Refer: https://taxguru.in/income-tax/clubbing-of-income-under-the-income-tax-act-1961.html

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Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

07 September 2024 Good Luck.

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