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Shares inherited from family member will not have tax

When you inherit shares the cost in your hands is taken from the cost of the original holder and the period of holding includes the period for which the original holder had the shares

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Shares inherited from family member will not have tax
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I have inherited shares from my deceased father. As I do believe that I should be honest enough to make the justified division of proceeds amongst my family members (family of my brother, who was predeceased to father: my mother and brothers ), I have asked the broker to join their names in demat but was told that since nomination was only in my name, no other name can be joined. I have added some more investment by selling and reinvesting the equities and also by some fresh investments. I wish to seek help on following points.

1. How can I transfer the investments to other beneficiaries? What would be the tax implications and holding period for transferees?

2. What would be the impact of recent long-term capital gains (LTCG) tax? Should I sell a greater portion of holding and reinvest them in the names of other family members to avoid any future complications of tax implication?

3. I'm staying with my aged and ailing mother and have not been filing returns. I'm not making any significant earning except interest on fixed deposit (FD) and equity trade.

4. I've studied in your article that in the scenario stated in point 3, that capital gain tax is payable only when it excludes income under other heads exceeds the basic exemption limit. If I'm right, whether this still hold good in view of 10% LTCG tax on equities?
M Ravi

There are far too many open questions in the email to be answered in the constraints of a single column. Let me attempt to answer those that can be answered with the limited information at my disposal.

I am making some assumptions as follows:

1. You inherited some listed shares from your late father who had bought these shares a long time ago.

2. These shares were inherited by you because you were the sole nominee in your father's demat account

3. You have sold some inherited shares on which a gain has been made

4. You have bought certain listed shares from such sales proceeds before January 31, 2018

5. You wish to transfer some of the inherited shares/shares bought by you to your mother, other brothers and the wife of a deceased brother

6. The gift receivers are likely to sell the shares received by them sometime after April 1, 2018.

7. You may also sell some of the inherited shares after April 1, 2018, or the shares bought by you after one year holding period is completed.

When you inherit shares the cost in your hands is taken from the cost of the original holder and the period of holding includes the period for which the original holder had the shares. So assuming that you sold listed shares inherited from your father the LTCG on such shares will be exempt from tax. When you gift shares to the relatives named above there is no tax in either hand. As and when the recipients of the gifted shares sell the shares in the market they will be eligible to tax. Assuming that the period held by you and the gift receiver exceeds one year this will be treated as long term capital gains and tax will be payable based on the cost in your hands or the highest cost as on January 31, 2018, whichever is higher.

As far as taxability of LTCG in your hands is concerned in respect of any shares sold under point no. 8 above the cost will be the cost as incurred by your father/yourself or the highest cost as on January 31, 2018. On the resultant LTCG, you will need to pay the tax of 10%. If your interest income and equity trading income are below the minimum amount not chargeable to tax in your case to that much extent your LTCG will not be taxed.

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