Lawfarm Team
Asked June 23, 2016

Gift shares to family

  • 1 Answer
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I wish to gift shares to my father & brother 10000 each of a pvt ltd unlisted company at Bangalore. Other than SH-4 0.25% stamp duty on consideration (book value of shares), kindly tell the stamp duty payable on gift deed. Also clarify Gift deed stamping charges. One more thing if company registered office is in Delhi then can I still make gift deed in Karnataka. If yes then are the charges same for it in gift deed case

Answer 1

First of all if your shares are in physical form then only you need to pay 0.25 % stamp duty upon them with the SH-4 form under Section 56 of the Companies Act, 2013 Stamp duty for transfer of shares is 25 paise for every Rs. 100 or part thereof of the value of shares as per section 62 of The Indian Stamp Act, 1899 or the market value of shares prevailing on the date of the document, whichever is higher. In case your shares are in electronic format in a DEMAT Account, then Under 8A of the Indian Stamp Act, securities issued in electronic form need not be stamped provided the issuer pays stamp duty on the total amount of securities issued. Also the transfer of registered ownership of share from a person to a depository or from a depository to a beneficial owner shall not be liable to any stamp duty. As you want to transfer this property as a gift you will have to register the gift before the sub-registrar as per section 17 of the Registration Act, 1908, and Section 123 of the Transfer of Property Act. In your case will not apply as the gift is being made to your father and brother who are your blood relatives and gifts made to blood relatives are exempted from stamp duty according to Section 56 (2) (vii) of The Income Tax Act, 1961. You can transfer the shares of a company registered in Delhi through a gift deed made in Karnataka as the law does not bar transfer of property registered in one state through a gift deed made in other state.An instrument of transfer of shares i.e. Form SH.4 with the date of its execution will be delivered to the company within sixty (60) days from the date of such execution by you. After receipt of share transfer deed, the Board of Directors will determine the validity of the deed and will register the transfer by passing a resolution. Researched by - Rahul
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