I had bought shares worth ₹4 lakh in 2006-09. Their value is around ₹6.5 lakh now. I want to gift these to my son, who is 27 years old. Should I sell the shares and gift him the money, or should I gift him the shares directly? What would be beneficial in terms of taxation for both of us?
—Menaka Sriram
From an Indian income tax perspective, gifting of any sum of money or any property (including shares) to your son would not trigger a taxable event, either in yours or your son’s hands. Stamp duty implications, if any, on the transfer of shares to your son should, however, be evaluated.
Further, when he subsequently sells these shares received as gift, he can claim your date of acquisition and cost of acquisition as his date and cost of acquisition, respectively.
If you choose to sell the shares, you will be required to compute the taxable long-term capital gains or loss (as the case may be) arising in your hands. Subsequent transfer of money to your son will not be taxable either in yours or your son’s hands.
An agent from Africa refers patients to my medical tourism company in India. I pay some commission to him through outward remittance. The agent has no business connection in India. Am I required to deduct tax deducted at source (TDS) on the commission?
—Vinayak
The TDS obligations in India depend on the payor, payee status and the nature of payment. Hence, detailed facts and agreements would need to be understood in your case to comment on this.
Generally, TDS has to be deducted on any payment made to non-residents unless it can be established that the same is not taxable in India owing to the specific facts of the case, availability of a nil withholding tax order or benefits available under the relevant double tax treaty.
Parizad Sirwalla is partner and head, global mobility services, tax, KPMG in India. Queries and views at mintmoney@livemint.com
