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Stock as gift

Gauthami (Student CA Final ) (428 Points)

06 January 2020

are there any tax consequences if brother A gives stock to Brother B without consideration for business commencement? can it be written as gift? if written so, what are consequences?

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7 Replies

prasad Nilugal ( GST Practitioner & Accounts ) (14149 Points)
Replied 06 January 2020

As per Schedule I (2) of the CGST act 2017 , supply of goods or services to related party or distinct person made in course of furtherance Business even without consideration will be treated as supply and GST applicable .

confirm with others also.

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Gauthami (Student CA Final ) (428 Points)
Replied 06 January 2020

Yes, on such sales, Gst paid by brother A & brother B shall pay Gst on same. I want to know tax consequences

prasad Nilugal (3909 Points)
Replied 06 January 2020

I not getting you point , because GST applicable is Tax consiqence

Gauthami (Student CA Final ) (428 Points)
Replied 06 January 2020

I want to know income tax consequences

rama krishnan (12234 Points)
Replied 07 January 2020

It should be shown as part of turnover and tax should be paid. however the same is not taxable in the hands of B

1 Like

Gauthami (Student CA Final ) (428 Points)
Replied 07 January 2020

Can B show that as purchases? in that case his profit shall be reduced and tax paid will be less?

CMA M.Keerthi chandra (C.A FINAL STUDENT AND QUALIFIED C.M.A) (561 Points)
Replied 07 January 2020

Here the point is at what value you do you consider the stock in your books.But any way, will add G.P while making sale and pay tax on it , hence you can treat as your expense.

You write off the balance of your brother to capital.