Shares

Dear Sir,

Hope you are doing well !!

She can transfer the same as gift.

Gift from the relative is not covered in the taxable income in the hands of the recipients u/s 56 of the Income Tax Act.

Taxes on the gifting of shares are exempt in the following situations:

1. Individual receiving gift from a relative (including siblings, spouse and lineal ascendants or descendants)
2. Individual receiving gift on the occasion of marriage
3. Gift received by way of inheritance.

Please note that If the shares are in physical certificate form, a share transfer deed will have to be executed and sent to the registrar of the company. Also, prepare a gift deed for the same. Since shares are considered “movable property”, it is not mandatory to execute a gift deed. However, in order to create a legal record, it is best to execute a gift deed on an appropriate stamp paper.

We may assist you in entire procedure & compliances.

If shares are tansferred at face value there will be no capital gain. Documents required will be agreement for transfer,Form SH4, Board Resolution signed by director of the company.

Yes shares can be transferred without paying any tax if such gift is being paid to sisters but gift deed should be prepared.

Alternatively it is advisable to show sale of such shares at cost price to avoid any capital gain and easy transfer.

Your broker would help you transfer such shares if they are listed.

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Thank you.

Hi

There would be no tax liability on gifting shares to the sister. No tax for transferor. No tax for transferee.

Tax liability shall arise on sale of shares later by transferee.

- As relation of sisters fall under the definition of relative specified under the Income tax Act, transfer of shares as a gift (i.e. without consideration) would be exempt in the hands of recipient. Also no tax is payable by the donor. It is advisable to draft a proper gift deed and get it registered. 

- Tax would be payable at the time of sale of shares by the recipient. In such case, cost and holding period to the previous owner (i.e. donor) would be considered to calculate the tax. If the shares are listed on stock exchange, retain the original contract notes for determination of actual cost subject to applicability of grandfather clause u/s 112A.

- Transfer of shares - If the shares are listed and in demat form, take the assistance from the broker. If the shares are unlisted then I can assist you in the transfer process.

For detailed discussion you may opt for phone consultation.

Dear Sir,

Gift of shares to the sister is not taxable as it is gift from relative. Both the donor and donee need not pay any tax. However, it is advisable to have a registered gift deed. The recipient would have to pay tax at the time of sale of shares  In such case, cost and holding period to the previous owner (i.e. donor) would be considered to calculate the tax.

Regards,

Taxfull platform is for Indian taxation issues. It seems you asked question from UK taxation perspective.

Respected Sir,

In general terms, the word transfer means a conveyance of property, especially stocks and shares, from one person to another. And one of the major features of a Company is ‘Free Transferability of shares’ subject to few restrictions on Private Companies prescribed under the Articles of Association of the Company. Now, Transfer of Shares may be by way of Sale, Mortgage, Pledge, Gift, Death, Succession, Inheritance, Bankruptcy, etc. However, due to vastness of the provisions, I have limited the scope of this paper to Transfer of Shares by way of Gift.

As per the provisions of Sub Section (1) of Section 56 of the Companies Act  2013, A company shall not register a transfer of securities of the company, or the interest of a member in the company in the case of a company having no share capital, other than the transfer between persons both of whose names are entered as holders of a beneficial interest in the records of a depository, unless a proper instrument of transfer, in such form as may be prescribed, duly stamped, dated and executed by or on behalf of the transferor and the transferee and specifying the name, address and occupation, if any, of the transferee has been delivered to the company by the transferor or the transferee within a period of sixty days from the date of execution, along with the certificate relating to the securities, or if no such certificate is in existence, along with the letter of allotment of securities: Provided that where the instrument of transfer has been lost or the instrument of transfer has not been delivered within the prescribed period, the company may register the transfer on such terms as to indemnity as the Board may think fit. As per the provisions of Sub Section (4) of Section 56 of the Companies Act 2013, Every company shall, unless prohibited by any provision of law or any order of Court, Tribunal or other authority, deliver the certificates of all securities transferred — within a period of one month from the date of receipt by the company of the instrument of transfer under sub-section (1) or, as the case may be, of the intimation of transmission under sub-section (2), in the case of a transfer or transmission of securities; Rule 11 of the Companies (Share Captial and Debentures) Rules, 2014 An instrument of transfer of securities held in physical form shall be in Form SH.4 and every instrument of transfer with the date of its execution specified thereon shall be delivered to the company within sixty days from the date of such execution. Procedure for transfer of shares by way of Gift 1. Preparation of Gift Deed for transfer of Equity share or Preference Shares; 2. Delivery of Gift Deed along with share certificate by Donor in favour of Donee; 3. Gift Deed along with share certificate should be accepted by or on behalf of Donee; 4. Execution of SH-4 and payment of an adequate amount of stamp duty; 5. Delivery of duly Stamped, dated and execute transfer documents by gift, by Donor or Donee to the Company within 60 days from the date of its execution; 6. The company should call the Board meeting, which is required to be convened within a period of 1 month from the receipt of transfer documents by way of Gift; 7. Convene the meeting and pass the Board Resolution for transfer of shares by way of Gift; 8. The company should deliver the certificate of share transfer within one month from the receipt by the Company of the transfer documents by gift.

Hope this will solve your query.

Regards 

Shiv Kumar Agarwal

1) I assume that you are referring to Indian taxation for the shares to be transferred by your daughter to her sister. If its so, there is no tax liability on the gift of shares between two sisters, as they are relatives as defined in Explanation to Section 56(2)(vii) of Indian Income Tax Act. 

However, when the donee sells the shares, the cost of acquisition of the donor will be the cost of acquisition in the hands of the donee.

2) I assume that your company is not listed and are also not under Demat. A transfer form needs to be signed by the transferor and transferee and submit the same to the company for changing the name of the shareholder.

3) It should not take much time. You need to affix stamp on the stamp paper and submit the same to your company. Hold a Board Meeting asap and approve the transfer.