Share transfer as gift to the directors

Pvt ltd 242 views 3 replies

Kamal Pal

Dy. Mgr. Accounts

128 Points Joined July 2011

Dear Members,

We want to merge two of our Pvt. Ltd. Comp. out of which company A is Holding and B is subsidairy having same shareholders and directors (beneficery owners). Reason being company A is not in business for years and we do not want to maintain compliances further. Now Comp. A holds 65000 thousand of shares in comp. B so we decided to transfer shares as Gift to the directors. Question is how and under quoting which section (both company and income tax act) shares can be transferred as gift so that transferror do not receive any capital gain and the procedure for doing it.

Replies (3)

sabyasachi mukherjee

27880 Points Joined May 2017

That is possible

Kamal Pal

Dy. Mgr. Accounts

128 Points Joined July 2011

Hi, It will be nice if you can please send details about the sections to apply and read for references for clarity under the act.

Jatin Bajaj

2930 Points Joined April 2016

You need to check the provisions mentioned under the Articles of Association. Generally Private Company restricts the transfer of shares. AOA of the Company may have certain conditions with respect to transfer of shares. Further transfer of any capital asset under gift as per section 47 is not regarded as transfer.

Further as per section 56 , if the shares are received as gift without consideration or inadequate consideration in excess of 50,000 would be taxable in hands of directors