FYERS does not provide tax advice. Users should consult a qualified tax advisor or chartered accountant for guidance on income tax reporting and capital gains computation.
In most cases, the person gifting the shares does not have to pay capital gains tax at the time of gifting.
Under Section 47 of the Income Tax Act, transfer of a capital asset by way of gift is generally not treated as a taxable transfer for capital gains purposes. However, this provision has specific exceptions, including certain shares, debentures, or warrants allotted under employee stock option plans.
The receiver's taxability depends on the relationship with the sender and the fair market value of the shares received.
Under Section 56(2)(x), specified movable property such as shares and securities received without consideration may become taxable if the aggregate fair market value exceeds ₹50,000 in a financial year.
If taxable, the value is generally treated as Income from Other Sources and taxed as per the receiver's applicable income tax slab.
Gifted shares are generally exempt from tax in the receiver's hands when they are received:
These exemptions apply only when the transaction satisfies the relevant conditions under the Income Tax Act.
Capital gains tax may apply when the receiver later sells the gifted shares.
For capital gains computation, the cost of acquisition is generally considered to be the original purchase cost of the previous owner. Section 49 states that where a capital asset becomes the property of the taxpayer under a gift or will, the cost is deemed to be the cost at which the previous owner acquired it.
The holding period may also include the period for which the previous owner held the shares. Based on the applicable holding period, the gains may be classified as:
Section 2 also provides that where a capital asset becomes the taxpayer’s property in circumstances covered under Section 49(1), the period for which the asset was held by the previous owner is included.
To avoid issues during tax filing or future scrutiny, both the sender and receiver should maintain:
For reporting purposes on FYERS platforms, transferred shares may reflect the market price on the date of transfer as the transaction value.
However, for income tax computation, users should verify the correct acquisition cost, holding period, exemption eligibility, and applicable tax treatment separately.
| Scenario | Solution |
|---|---|
| What if I gift shares to a specified relative? | Gifted shares are generally exempt from tax in the receiver’s hands if the relationship qualifies under the relevant conditions of the Income Tax Act. |
| What if the fair market value of gifted shares exceeds ₹50,000? | If the gift is not covered under an exemption, the value may be taxable as Income from Other Sources in the receiver’s hands. |
| What if I sell shares received as a gift? | Capital gains tax may apply when you sell the gifted shares. The original owner’s acquisition cost and holding period may be considered for tax calculation. |
| What if FYERS shows a transfer value for gifted shares? | The transfer value shown on FYERS platforms may reflect the market price on the date of transfer for reporting purposes. Users should separately verify the tax treatment with a qualified tax advisor. |
| What if I am unsure about the tax treatment? | Consult a qualified tax advisor or chartered accountant before filing your income tax return. |
Last updated: 22 May 2026