Gift of stocks to son worth one cro

935 votes

Registration of gift deed is mandatory in the case of gift of immovable property and in the case of movable property, it is optional. Hence, you can notarize the Gift Deed to transfer moveable property, i.e, shares from your Demat Account to your Son's Demat Accounts and keep two witnesses.

Advocate Pankaj Bajaj LawRato

923 votes

1. Demat Transfer Procedure: The transfer of shares from your demat account to your son’s account through the bank's demat transfer procedure is valid under the regulatory framework. Ensure compliance with the procedural requirements as stipulated by the depository participant (DP) and relevant banking guidelines. 2. Execution of Gift Deed: While executing a notarised gift deed on a stamp paper of Rs. 500/- is adequate for documenting the intent and nature of the transaction, it must clearly state: The donor's (your) intention to gift the shares without any consideration. The donee's (your son’s) acceptance of the gift. Specific details of the shares being gifted (company name, number of shares, ISIN, etc.). 3. Income Tax Implications: Under the Income Tax Act, 1961, gifts made to a relative (as defined under Section 56(2)(x)) are exempt from tax. Since the shares are being gifted to your son, this transaction should not attract any tax liability, provided the relationship and gifting norms are satisfied. The notarised gift deed, along with the demat transfer proof, will serve as supporting documentation in case of future scrutiny. 4. Non-Registration of Gift Deed: Registration of the gift deed is generally mandatory for immovable property but not for movable assets such as shares. A notarised gift deed should suffice for evidentiary and tax compliance purposes in this case. Our Recommendation: While a notarised gift deed is sufficient for this transaction, we advise maintaining proper documentation, including the demat transfer acknowledgment, to ensure transparency and compliance with applicable laws. If required, we can assist you in drafting the gift deed to ensure it meets all legal formalities. Should you have any further queries or require assistance, feel free to contact us. Warm regards, Jairam Chandnani Advocate Lexim Associates

Advocate Jairam Chandnani LawRato