Gift - Shares and Securitites - from Father

[Jignesh Shah]

Dear Expert, My client has a typical problem. She is working with a Financial Services company. She started investing in stock markets from year2001 onwards. She had her D-mat account in her maiden name with her husband being the joint holder. She invested / traded in the same account till 2006. Then she had some disputes with her husband for some reasons and fearing the worst she transferred the shares in her D-MAT account to her father's account in his single name. This transaction took place in 2008. She closed her D-MAT account. The dividend for the same was credited to a bank account jointly held by her father and her. Now the disputes with her husband are settled. She wants to transfer the shares back from her father's account to her new D-MAT account. Can she take Gift from her father of the shares which she had tranferredr? There has been no transaction in her father's D-MAT account sinc the shares were transferred. Also, her father has not shown the dividend income in his return. The portfolio is worth a significant amount. What is the best way to take the custody of the shares in her account legally?

AI Summary

Gift of shares between relatives can be reconveyed by deed and is exempt from taxation as gift receipt.
Transfers of shares between close relatives are covered by a relative exemption to the gift provisions; a gift of the shares back to the daughter can be effected by executing a gift deed and transferring the securities through demat procedures without registration formalities. The advisers note absence of trading in the father's account (other than dividends), and advise that the gift receipt is not income requiring disclosure in the daughter's return, though dividend receipt taxation depends on reporting by the recipient.