suppose i transferred rs 1 lac on 1-1-08 in my friend bank account to purchase shares from market as i didnt have Dmat Account.
now i want to get tfd those shares in my Demat account. the present market value of shares say rs. 1.25 lacs. So can he tfr those shares at cost in my account ie at 1 lac or he need to consider market value.
i am little bit confused about tax implication. In my point of view he can tfr shares at cost coz the consideration is 1 lac which i have paid him in advance or at the time of purchase of shares.
So tell me all the possible tax effect in this case.
22 April 2008
dear sir, legally what happened is that your friend has purchased shares worth Rs 1 lak from the market and now he is transferring it to you . -the question is what is the value that can be adopted for transfer. You cannot adopt any value less than its market price - The Assessing Officers may not object if you adopt mkt price as reduced by brokerage that might have been payable to brokers if sold in Market.
23 April 2008
i am sorry i am not getting you again my question is can my friend transfer shares at price below to market price? or you can say can he tfr it at cost and the diff between these two is almost 30% ie market value is higher than cost
29 April 2008
Dear Aunjji, 1.when you paid the money to your friend it was just simple advance money as you have not appointed him as your manager or agent. Moreover only Registered Broker- SubBroker can deal on any stock exchange on Behalf of client as per Law. As your friend is not broker-sub broker Hence In My opinion It can not be said that he acted as agent or broker on behalf of you.
Eventhough your Friend can tranfer the shares in your name at cost of Rs.1.00 lac but inthat case the difference between Fair Market Value on the day of transfer & Cost of Purchase of Shares by Your friend will be treated as deemed gift and your friend will be liable for gift tax.
CAclubindia
