Gifted shares cost

My grandmother had 1000 shares of rs 50/- each in her name (year 2000) so 50,000 rupees original cost

On death - 2023 - my father and my uncle received half each - so 500 shares each

Market price - 120 rupees 

My uncle gifted me 250 shares. 

What should I put as my cost? (should it be 120 rupees? / should it be 2018 fair market value? Should it be 0? Or other?) - from angle of taxability of I sell part / whole of the 250

 

 

Replies (2)
Quick Summary
When you receive gifted shares, the cost basis for tax purposes is generally the value at which the donor acquired them. However, for taxability upon receipt, gifts without consideration exceeding £50,000 are taxable under Section 56(2) of the Income Tax Act. As you received shares from your uncle, you likely fall under an exemption unless the fair market value exceeded £50,000. It's crucial to maintain a gift deed for documentation. If you decide to sell, the cost basis will be relevant for calculating capital gains tax.

Gifted shares are valued at notional value or market value.
  • Under Section 56 (2) of the Income Tax Act, the recipient (you) is liable to be taxed for gifts of movable property (such as shares) without consideration and exceeding the fair market value of more than ₹50,000.
  • Exemption: Since you received the shares as a gift from your uncle, you fall under the exemption category (unless the FMV exceeds ₹50,000).
  • Proper documentation, such as a gift deed, should be maintained to justify the genuineness of the gift transaction
  • If you have decided to sell it, it would be cost basis

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