ITR
Selling shares received as a gift
Updated . Every paid answer is checked by a CA. Free AI answers are labelled until a CA verifies them.
Facts
A gift from a relative is not taxed when received. On sale, the cost and holding period of your mother are used. Only the gain on sale is taxed.
Provisions and law
- Sec 47 (now Sec 70)Gifts and inheritance are not transfers, so no capital gain arises on them
- Sec 49 (now Sec 73)For inherited or gifted assets, cost is the cost to the previous owner
- Sec 56(2)(x) (now Sec 92(2)(m))Money or property received without consideration above ₹50,000 is taxable, except gifts from relatives and on specified occasions
Analysis
If your mother bought the shares for ₹1,00,000 in 2020 and you sold them for ₹3,00,000, your gain is ₹2,00,000 and long term. Under Sec 112A, ₹75,000 is taxable after the ₹1,25,000 exemption, if you have no other equity gains. Gifts from non-relatives above ₹50,000 would be taxed as income on receipt instead. Keep the transfer records showing it was a gift.
Conclusion
- Get your mother's purchase date and cost.
- Compute the gain using her cost and holding.
- Report in Schedule CG and 112A.
- Keep the gift letter.
A Savvy can do this for you
Income tax return with capital gains, ITR-2
₹2,499
Get this doneAsk a Savvy on WhatsAppGeneral guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.