How To Gift Stocks: Procedure, Methods and Benefits

How To Gift Stocks: Procedure, Methods and Benefits

Stock can be given to the recipient, who will benefit from it during price appreciation. Creating interest in the share market, business, or industry is fun when you give shares as gifts. Investment stocks may be issued to the beneficiaries of an investment portfolio via a brokering company. Furthermore, they can be given one stock share to train young people on money, investments, and saving.

Remember that shares gifted with a capital gain will be transferred to the receiver in addition to any gains. Consequently, the receiver will pay capital gains tax on the difference between the initial cost base, or purchase price, and the selling price when it sells these shares.

Let’s move ahead in this article to understand how to gift stocks.

Process of how to gift stocks

Anyone with an Internet brokerage account could be gifted shares of stocks, ETFs, and gold bonds etc assets of the share market. If the recipient has no account, they can create one and receive the gift.

Follow the below-mentioned steps if you want to know how to gift stocks to someone in India;

  1. Access the Online Trading Platform. 
  2. You can get the client ID by clicking on it. 
  3. You can find the gift stock by clicking on it. 
  4. Enter the recipient's name, cell phone number, and email address. 
  5. Click on Continue. 
  6. Choose the shares to be gifted and approve them for gifting. (DOC) 
  7. Enter the quantity. 
  8. To confirm and send, click on the OK button.
  9. Platforms' trading apps send a message to the recipient requesting that they accept the gift within seven days. At this stage, the stocks are not transferred from the demat account
  10. An email and SMS message is issued after the gift is accepted, asking the receiver to confirm their identification and transfer the stocks using their CDSL TPIN.
  11. The brokerage platform shall then facilitate an off-market gift transfer through CDSL, which the OTP must verify. If it is a trading day or another, CDSL shall send an email and SMS confirmation of the off-market gift transaction at 5 p.m. on the same day. 
  12. You must enter your PAN or 16-digit Demat account ID before 8 p.m. on the same day and complete a SMS OTP verification.
  13. The securities are transferred to the recipient's demat account and will reflect in their accounts the next day.

Note: The gifting procedure must be restarted if an OTP verification is not done by 8 p.m. the following day.

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Table of Content

  1. Process of how to gift stocks
  2. What Are The Charges And Tax Implications Of Gifting Stocks To Someone In India?
  3. How To Gift Stock In India To Someone Through Offline Mode
  4. Benefits of Gifting Shares
  5. Conclusion

What Are The Charges And Tax Implications Of Gifting Stocks To Someone In India?

A standard off-market transfer fee of Rs. 25 or 0.03% per share plus 18% VAT, whichever is higher, shall be applicable. The gift of securities shall not be subject to any further charge. This shall be debited from the sender's trading account without delay.

The value of the stocks allocated is a determining factor in the tax implications. The recipient can have tax implications if the value of the gift is more than Rs. 50,000.

How To Gift Stock In India To Someone Through Offline Mode

In this method, the donor shall fill in a (DIS) distribution instruction slip with details of shares to be distributed, demat accounts details, etc., and present it to their depository participant. The DP will then transfer the shares. The beneficiary must, however, send a receipt instruction to their Depositary Party to receive the shares.

Benefits of Gifting Shares

Compared with fixed-income securities investments, higher returns can be achieved through stock market investments. Gifting stocks can also be an excellent way to invest. Look at the benefits of gifting shares below;

1. Helps overcome the effects of Inflation:

Inflation is a general rise in the price level of an economy over time. This reduces the value of your investments and the purchasing power of your money. They will, therefore, not be able to combat inflation effectively. The return on the stock market can be significantly higher if you stick with it for an extended period, allowing you to beat inflation.

2. Ease and Flexibility: 

Giving stock as a gift may also benefit the beneficiary, as the beneficiary can avoid paying taxes on the profits or gains if the stock has increased in value since the gift was made. Although there are several ways to gift stock, the method depends on how it is held in its present form.

Conclusion

It's simple to invest in the stock market. All you need is the discipline to invest for a more extended period and some background research on companies you want to invest in. It's easy to do it yourself, or a broker can do it. All you need to do is set up a trade and deposit account.
To invest in shares or any other financial investment, and if you are looking for services like opening a trading and demat account, you can go ahead with the highly reliable and trading platform such as blinkX, download blinkX trading app for more opportunities to invest in the stock market.

How to gift stocks FAQs?

To transfer shares from your Demat account (donor account) to the donee's Demat account, you must submit a delivery instruction slip to your Demat account provider (DP or depository participant). Utilizing your online demat account is one way to do this.

Such gifts shall be exempt from tax if the value of shares and securities amounts to up to INR 50,000.

Your cost base will be transferred to someone else if you give out existing stock. You're not going to owe capital gains tax because you didn't sell the investment, and the beneficiary is not going to pay taxes until you sell the shares.

The time during which the person who gave you the shares held them shall be included in your holding period. However, your basis may be fair market value when a gift is received. If this is the case, you will hold your gift stock for one day from the date of its receipt.

According to Article 62 (a), Schedule I of the Indian Stamp Act, 1899, the transferee must pay stamp duty at a rate of Rs 0.25 for every Rs 100 of the value of the share since the transfer of shares is subject to the central stamp tax.