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Business News/ Money / Calculators/  Shares received by business associates taxable for NRIs
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Shares received by business associates taxable for NRIs

If business associates also happen to be your relatives, the receipt of gift would not be taxable

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I am likely to receive shares of an unlisted company by business associates in India as gift. Are there any income tax implications in my hand and in the hands of donors?

—S. Ghosal


Where any individual receives any shares without consideration or for a consideration which is less than the fair market value, then the difference between fair market value and the consideration paid exceeding 50,000 is taxable as income of the recipient. This provision applies to resident as well as non-resident recipients. Fair market value is to be computed as per prescribed rules.

If the gift is received from a relative or on the occasion of the marriage of the individual or under a Will or by way of inheritance or in contemplation of death of the payer or donor, as the case may be, then such gifts will not be taxable. A relative for this purpose has been defined to mean spouse of the individual, brother or sister of the individual, brother or sister of the spouse of the individual, brother or sister of either of the parents of the individual, any lineal ascendant or descendant of the individual, any lineal ascendant or descendant of the spouse of the individual, and spouse of the brother, sister of the individual or spouse of any lineal ascendant or descendant of the spouse of the individual.

In your case, the shares are to be received from business associates who may not be covered under the definition of the term “relative". Consequently, you would be subject to tax in India with respect to income arising from the gift. If any of the business associates also happen to be your relatives (as defined above), the receipt of gift would not be taxable.

What is the tax treatment for income generated from selling a property in India by a Person of Indian Origin (PIO)?

—Rishab Chaddha


I assume that the property in question is an immovable property located in India.

Any gain arising on sale of immovable property situated in India will be taxable in India. If the property has been held for more than 36 months, it will be classified as a long-term capital asset and the gain arising would be taxable at the rate of 20% plus applicable surcharge and education cess.

In case the property is held for less than the period mentioned above, it will be classified as a short-term capital asset and the gains arising would be taxable at the applicable slab rate plus surcharge and cess.

Further, if the PIO is a non-resident for Indian tax purposes, the PIO may be eligible to claim benefits, if any, under the applicable double taxation avoidance agreement.

Queries and views at mintmoney@livemint.com

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Published: 26 Feb 2015, 06:25 PM IST
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