My father-in-law had bought some shares in name my sister-in-law couple of years back, the intended beneficiaries were three sisters. He passed away in 2006; the shares were continued to be held in physical form in name of one sister and were declared in her tax return. Now, in 2010 all three sisters want to distribute the shares amongst themselves. what would be the tax implication for all the sisters?
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tax implication
Replies (6)
It shall be a sale purchase transaction of shares among them and accordingly capital gain provisions shall be attracted.
I will suggest to gift by the sister to other sister. Gift by one sister is not taxable
Yes. Agree. This is a better way to distribute among themselves.
Dear Chandarana,
Mr. Bimal is rite,
Shares can be gifted to Other sisters..Gift will not attract Capital Gain in the hands of transferor since it is not regarded as transfer u/s 47...Further the value of shares will not be taxable in the hands of receiver since it is received from a relative as per Explanation to Sec 56 (2)
Cost of ACQUISITION & PERIOD OF HOLDING OF PREVIOUS OWNER WILL BE INCLUDED IN COMPUTING THE CAPITAL GAINS IN THE HANDS OF RECEIVER...
Dear, Remember the implication of Gift as Index benefit may get reduced at later stage as compared to taxing as capital gain right now . 56(2) is not applicable as gift is in other than cash in the first place. thanks
I FEEL AMIR IS CORRECT AND COST TO PREVIOUS OWNER WILL BE COST TO ASSESSE....AND NO CAP GAIN........AS GIFT FROM RELATIVE........
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