Tax liability on gifted shares ( long term gain )
This query is : Resolved
10 May 2014
My Father gifted shares without any consideration ( held by him for more than 2 year means long term ) to Family HUF a/c of which he is also operator . Shares were sold within one year ( means short term ) in HUF a/c . Now my questions are
1) What will be tax liability of my father & HUF a/c ?
2) How it will be reflected in my father & HUF IT return ?
1) What will be tax liability of my father & HUF a/c ?
2) How it will be reflected in my father & HUF IT return ?
CA Parul Saxena
(Expert)
10 May 2014
Shares would be taxable in HUF and period of holding of your father would also be considered for computation of Capital Gain.
In HUF the entry would be Investment(Debit) to Gift received (Credit the income)
In HUF the entry would be Investment(Debit) to Gift received (Credit the income)
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10 May 2014
Thanks . I am clear on first answer . I want to know if capital gain is also to be shown in my father return ? I understood that it will be income ( Not gift amount but only capital gain amount ) in HUF a/c . Kindly clarify .
CA Parul Saxena
(Expert)
10 May 2014
Capital gain would be taxable in HUF
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Prof. Bajaj
(Expert)
02 August 2014
As per sec 64(2), if an individual transfers assets to his HUF without adequate consideration, then the income is clubbed with the transferor.
In this case, the capital gains would be treated as your father's individual capital gains and not HUF.
If the shares are listed and STT is paid, then the capital gains will be tax free. Thus, no tax liability on your Father.
In this case, the capital gains would be treated as your father's individual capital gains and not HUF.
If the shares are listed and STT is paid, then the capital gains will be tax free. Thus, no tax liability on your Father.
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