Is It Tax Deductible To Gifting Shares To Your Spouse?

Is It Tax Deductible To Gifting Shares To Your Spouse

Is It Tax Deductible To Gifting Shares To Your Spouse: A gift could be made in the form of money, material objects, or Financial assets. To avoid any fines, it’s essential that you keep all pertinent records about gifts and are aware of the tax ramifications. While filing an income tax return, it’s also vital to disclose gifts.

According to the Income Tax Act of 1961, any gift of shares to a specific relative is exempt from taxation in the hands of the receiver. A spouse is a “relative” as that term is defined in Section 56(2)(vii) of the Act.

Is It Tax Deductible To Gifting Shares To Your Spouse

According to the Income Tax Act, capital gains tax may apply when a capital asset is transferred. Gifts, however, are expressly excluded from the concept of transfer in Section 47. As a result, the giver of a gift is exempt from paying income tax on the exchange.

On the other hand, it’s crucial to be aware that gifts of moveable property, such as shares, ETFs, and mutual funds, among others, that are given without receiving anything in return and have a Fair Market Value of more than Rs 50,000 may subject the recipient to taxation under Section 56(2) of the Income Tax Act. Such presents should be reported as income under the heading Income from Other Sources on the income tax return.

However, under the following circumstances, gifts may be eligible for tax-free status even for the recipients:

  1. A present that someone receives from a family member, such as siblings, a spouse, or a lineal ascendant or descendant.
  2. An individual receives a gift on the day of their wedding.
  3. An inheritance bestows a gift on the recipient.


Tax On Gifted Shares ITR Filing

The sender of the gift is not obligated to report the present on their tax return. On the other hand, if the gift is tax-exempt, they should record it on Schedule OS (IFOS) or declare it under Schedule Exempt Income. If the gift is taxable, determine the amount of tax due using the appropriate slab rates.

Any gains from the disposal of these shares and securities should be reported as capital gains on Schedule CG in the ITR. Taxes must be paid using Form ITR-2 and in accordance with the appropriate tax slab.

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