Gifting Private Limited Shares

1088 views 2 replies

kings22

Shareholder

167 Points Posted on 07 August 2024

Hello - I have a quick question on gifting shares.

We have a shareholder in private limited company with 2 shares out of 10000 and he wants to transfer those 2 shares to another non-related shareholder (as they are not falling in the definition of relative as per companies acts). The value of these shares is Rs. 10 each (So Total 20). We will get a gift deed and SH4 Form signed for the gift.

1- Is there any issue with doing a gift deed in this situation?

2- Does the shareholding these shares have to declare Rs 20 as income in his Income Tax?

Thank you for your quick response.

Replies (2)

Aashok Kumar Sharma

Finance/Compliance Consultant

62119 Points Posted on 07 August 2024

Gifting shares in a private limited company involves a gift deed and SH-4 form. The gift deed declares the intention to gift shares, while the SH-4 form records the transfer. The recipient must declare the gift's value in their income tax return, and it's advisable to consult a tax professional. Additional considerations include stamp duty and company's Articles of Association. Consult a legal or financial advisor for proper compliance.

kings22

Shareholder

167 Points Posted on 13 August 2024

Hello Asha Ji - Thank you for your response. Does the person giving gift have to be a relative of the person receiving gift (Covered in definition of the relative by Companies Act) or it can be even a non-relative giving gift and receiving gift ?

If the gift value is less than 50000 Rs. does the recepient have to even declare it in Income Tax? In our case the book value of these gifts share value is less than 5000Rs.

Thank you again