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Capital Gains on retransfer of shares originally received through transfer

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H

50 Points Posted on 13 January 2021

It is understood that if an individual B receives shares through transfer of shares from a relative A (by way of transfer from one demat account to another), say as a gift, then Capital Gains liability on such shares shall arise only if and when they are sold by the recipient B and the date of purchase by original holder A shall be considered as the date of purchase for the purpose of caculating period of holding.

However, in case this individual B who has originally received these shares through transfer, decides to transfer them further to the original holder A / other holder C, what shall be the capital gains liability of B ir C, arising from such retransfer.

Replies (2)

Quick Summary

This discussion explores the Capital Gains tax implications when shares, initially received as a gift or transfer from a relative, are subsequently retransferred. It clarifies that tax liability typically arises only upon the sale of these shares by the recipient. The original holder's purchase date is used for calculating the holding period. The conversation seeks to determine who is liable for tax and when it becomes payable upon retransferring shares back to the original owner or to a third party.

Kapadia Pravin

10683 Points Posted on 14 January 2021

Capital gain liability for A on re-transfer shall be in normal way (difference in cost, sale value ). If B transfers to C non-relative then normal CG liability. B's cost would be that of A's cost of acquisition.

H

50 Points Posted on 14 January 2021

Thanks for your reply and clarification. However, it is requested to kindly clarify whether CG liability shall arise when shares retransferred to A are sold or even when they are just retransferred and held by A. Also, who shall be liable to pay tax on CG post retransfer, A Or B?