What are the income tax and LTCG implications in case I gift assets such as a house and equity shares to my daughter? Please mention the implication on me as well as my daughter.
—Name withheld on request
As the gift would be given to the daughter by a specified relative (i.e. father), the transaction of gift itself will not give rise to any income tax implications in either your or your daughter’s hands.
Generally, gift of an immovable property can be effected by a registered gift deed along with payment of applicable stamp duty, depending upon the state in which the property is situated. Further, with respect to gift of equity shares, it would be advisable that for any such gift to be documented in a legal document viz. a gift deed and placed in the records. However, you should seek a legal opinion on the appropriate documentation and stamp duty implications.
The onus of proving that the transfer of immovable property and equity shares between your daughter and you are gifts/irrevocable transfers would be on you and your daughter and there should be robust documentation to support the claim.
Also, for your daughter, as she would be receiving the shares and property as gift, she can consider the cost of acquisition as the cost incurred by you to acquire these assets, as and when she is computing capital gains/losses on sale of such assets by her.
Parizad Sirwalla is partner and head, global mobility services, tax, KPMG in India. Queries and views at firstname.lastname@example.org