Tax Implications of Gifting Stocks

What are the tax implications of gifting stocks?

Gifting stocks carries unique tax implications for both the person giving the gift (the Gifter) and the one receiving it (the Giftee).

For the Gifter:
  • Capital Gains: As outlined in the Income Tax Act, the transfer of a capital asset would typically be taxable under capital gains.
  • Exemption on Gifts: However, when shares or other securities are given as a gift, the gifter is exempt from any taxes on this transfer.
For the Giftee:
  • Upon Receipt of the Gift:
    • Gift Value Below ₹50,000: Gifts valued below ₹50,000 are exempt from taxes.
    • Gift Value Above ₹50,000: For gifts exceeding a value of ₹50,000, the giftee must pay tax under the heading Income From Other Sources (IFOS) at their applicable income tax slab rate.
  • Upon Selling the Gifted Stocks: Any capital gains or losses will apply when the giftee sells the gifted stocks.
  • Tax Exemptions:
Certain situations provide exemptions for the giftee as per the Income Tax guidelines:
  • Gifts from Relatives: Gifts from a relative (spouse, siblings of oneself/spouse, children, linear ascendants and descendants of oneself/spouse) are not taxable, regardless of the gift's value.
  • Gifts on the Occasion of Marriage: These are exempt from tax.
  • Inheritance: Gifts received as an inheritance are not taxed.
For a comprehensive understanding of tax implications, we suggest reviewing the income tax guidelines.

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