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Want to gift stocks on International Women's Day?

07 Mar 2022 0 COMMENT

Introduction

With International Women's Day around the corner, you may be wondering what to gift the special ladies in your life. Instead of giving a run of mill gift, consider giving the women in your life the gift of financial security. One way to do this is to gift them financial products such as shares or stocks of a company.

When we gift shares or stocks of a company, we transfer ownership of shares to someone else. The new owner will now get all the benefits. Also, these benefits will be taxed according to the tax bracket they fall in.

Gifting shares involves an off-market transfer of shares and can be carried out online or offline.

How to gift shares offline

A donor needs to fill out a Delivery Instruction Slip (DIS) in the offline method. It has details of shares to be gifted and donee’s account details. The donor has to submit a receipt instruction to her DP to transfer the shares. the depository participant will transfer the shares after that.

How to gift shares online

Most of the brokers allow one to gift shares online using the e-DIS facility. This process does not involve any physical document submission. The donor must select the gift option and the company, number of shares, and critical details such as the donee name and demat account details and submit it for gifting. The donee then needs to log in to her trading platform and accept it. The donor will then authorize the transfer at the CDSL or NSDL platform with a TPIN and OTP. SPEED-e facility from NSDL, EASIEST facility from CDLS can also be used for online share transfer.

A nominal service charge is levied by DP on gifting stocks from one account to the other.

Advantages of gifting stocks

      1.  Growth over time: Shares are a gift that grows over time. Stocks are an excellent option for long-term investment purposes.

      2.  Liquidity: Shares are liquid investments where the shareholder can sell the shares and convert them into money when needed.

    3.  Dividends: One can earn a regular income when companies declare dividends.  Dividends are paid out of the company's profit for distribution among shareholders. Investing in shares of a company benefits the investors as the company grows and starts making a profit.

      4.  Building wealth: Shares bought in small quantities contribute towards building wealth over time.

Click here to watch the investment journeys of women investors on ICICI Direct.

Things to keep in mind while gifting stocks

Gifting stocks essentially means you pass a potential tax to whomever you are gifting. The relation of the donor with the receiver and the value of the gift determines the tax liability.

If the gift is sent to close relatives enlisted under the Income Tax Act, it won't be taxed, irrespective of the value. However, if the gift is over Rs 50,000 to a person other than a relative, it will be taxed. These relatives are spouse, father, mother, brother and sister.

Also Read: Taxation on equity investments

You can consult your tax advisor to know more about the tax liability on gifting the shares.

Disclaimer – ICICI Securities Ltd. (I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is a Member of National Stock Exchange of India Ltd (Member Code :07730), BSE Ltd (Member Code :103) and Member of Multi Commodity Exchange of India Ltd. (Member Code: 56250) and having SEBI registration no. INZ000183631. Name of the Compliance officer (broking): Mr. Anoop Goyal, Contact number: 022-40701000, E-mail address: complianceofficer@icicisecurities.com. Investment in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents herein above are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. Investors should consult their financial advisers whether the product is suitable for them before taking any decision. The contents herein mentioned are solely for informational and educational purpose.