Tax on inherited shares

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When you inherit shares as a nominee, there's no immediate capital gains tax. The tax liability only arises when you sell the shares. For tax purposes, the cost of acquisition will be what your father originally paid for the shares, and your holding period will include his. This is crucial for determining whether any gains are short-term or long-term, affecting the tax rate applied.

Pooja

Pooja (Querist)

27 March 2025 I have received shares of my father after his demise as I was nominee in his demat account what will be the capital gain treatment of these shares

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

27 March 2025 No tax liability till you sell the shares.

Pooja

Pooja (Querist)

27 March 2025 What will be the date and cost of acquisition when the shares are sold?

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

27 March 2025 As per COA as of his father and the date purchased b him, unless prior to 31 Jan 2018. In later case FMV as of 31 Jan 2018.

Pooja

Pooja (Querist)

27 March 2025 If father had purchased shared on 1st January 2023 at a cost of 100 rs and then on death of father on 24 th April 2024 shared are passed on to nominee his son what will be the cost of purchase and date of purchase for son if he sells shared on 25 Sept 2024

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

27 March 2025 1st January 2023 at a cost of 100 Rs

CA Rashmi Gandhi

CA Rashmi Gandhi (Expert)

28 March 2025 Since you have received shares as a nominee after your father's demise, this will be treated as an inheritance. According to the Income-tax Act, there is no capital gain tax liability at the time of inheritance. However, capital gains tax will arise only when you subsequently sell these inherited shares.

Capital Gain Treatment When You Sell:
Cost of Acquisition: The cost to you will be the cost at which your father originally acquired the shares (Section 49(1) of the Income-tax Act).

Period of Holding: Your holding period will include your father's holding period as well (Section 2(42A)). This is important to decide whether the gain is short-term or long-term.

If the total holding (your father's period + your holding) is more than 12 months for listed shares, it will be treated as long-term capital gains (LTCG).

If less, it will be short-term capital gains (STCG).

Tax Rate:

LTCG on listed shares exceeding ₹1 lakh is taxable at 10% without indexation.

STCG is taxed at 15%.

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