This transaction of share transfer is not taxable in case - If mother is gifting share to their children .Tax implication arise in case if share are sold . Procedure is -
Transferring shares from a mother's demat account to her children's demat accounts involves several steps and considerations. Here's a general outline of how such a transfer might take place in India:
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Gift Deed Preparation: If the transfer is treated as a gift, a gift deed may need to be prepared. This document should outline the details of the transfer, including the intent to gift the shares and the terms and conditions, if any. -
Update Demat Accounts: Open demat accounts in the children's names if they don't already have them. Ensure all required documentation is submitted to the depository participant (DP) or broker.
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Transfer Request: The mother (the donor) needs to submit a transfer request to her DP or broker, indicating the shares she wishes to transfer, along with the details of the recipients (her children) and their demat account numbers.
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Gift Intention: Clearly indicate in the transfer request that the transfer is a gift to the children. Include any required documentation, such as the gift deed, as evidence of the intention.
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DP's Verification: The DP will verify the transfer request and ensure that the documents are in order. They might also verify the authenticity of the gift deed, if applicable.
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Transfer Process: Once the DP is satisfied with the documentation, they will initiate the transfer process. This involves changing the ownership details from the mother's name to the children's names in their respective demat accounts.
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Stamp Duty: Some states in India require payment of stamp duty on gift deeds. Check if this applies to your situation and make the necessary payments.
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Reporting: Ensure that all transfers are properly reported in the relevant tax forms and returns, such as the Income Tax Return (ITR) of the donor and the recipients.
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Tax Planning: Given the potential tax implications, work with a tax advisor to plan the transfer in a way that minimizes tax liabilities for all parties involved.
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Documentation: Keep all documentation related to the transfer, including transfer requests, gift deeds, and correspondence with the DP and tax authorities, for future reference and compliance purposes.
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