Daughter shall be liable to pay LTCG tax if gifted shares are bought after a yr

My father and mom purchased shares of blue-chip companies earlier than 1994, a few of them in collectively and others individually. My father died in 1994. Shares held by my father and people collectively held had been transferred to my mom by 2002. The relaxation, together with bonus shares, had been transferred by 2019. These shares had been gifted to my daughter, through a supply instruction slip in June 2019, who in flip bought them in December 2020. How to calculate capital positive factors tax? Will grandfathering clause (of 31 January 2018) be relevant? — Satya Nand It is assumed that your daughter is a serious within the fiscal yr the shares are bought. As the shares had been held by your daughter and your mother or father(s) cumulatively, for greater than 12 months, the asset shall be thought of as long-term capital asset and the positive factors arising out of the sale can be taxable as long-term capital positive factors (LTCG) in your daughter’s arms. LTCG from sale of listed shares is calculated because the distinction between web sale consideration (precise sale consideration much less brokerage and incidental bills) and the prescribed price of acquisition. Since the shares had been transferred to your daughter through present/inheritance, the precise price of acquisition to your daughter would be the price to the unique proprietor. As the shares had been acquired previous to 1 April 2001, the price of these shares may be substituted with the honest market worth (FMV) as on 1 April 2001, on the possibility of the assessee. Further, the fee for the aim of computation of LTCG from sale of listed shares shall be the best listed worth as on 31 January 2018 (rather than the fee referred to above), offered the listed worth as on such date, is lesser than the sale worth. However, the place the sale worth is lower than the listed worth, the fee for the aim of computation of LTCG, shall be sale worth or price referred to above, whichever is larger. The resultant LTCG to the extent it exceeds the general restrict of ₹100,000 every year is taxable in your daughter’s arms at 10% plus relevant surcharge and cess. Your daughter can search a roll over exemption towards this LTCG beneath Section 54F of the Act by buying or establishing a residential home property in India, topic to the prescribed circumstances and timelines. Parizad Sirwalla is accomplice and head, international mobility providers, tax, KPMG in India. Queries and views at [email protected] Subscribe to Mint Newsletters * Enter a sound e-mail * Thank you for subscribing to our publication.