Clarifications for taxation issues!

The safest approach is to avoid using the husband’s trading account informally for the wife’s investments. If the shares belong to the wife, sale should ideally be made from her own demat/trading account, or through a properly documented off-market transfer/gift/sale route.

If she gifts the shares to her husband, the gift itself may not attract tax, but any capital gains on subsequent sale can be clubbed back in the wife’s hands under section 64, since the asset was transferred to spouse without adequate consideration. Therefore, this may not minimise tax.

If the husband purchases the shares from her for fair market value, the wife will have capital gains at that stage itself.

Therefore, tax cannot be avoided merely by routing the shares through the husband’s account. Compute LTCG in the wife’s hands and use legitimate planning such as timing of sale, available LTCG exemption threshold, set-off of capital losses, and spreading sale across financial years where commercially possible.