Gifted share holding periods include prior ownership, but indexation begins only when the donee's deemed cost is taxed.

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....Gifted unlisted shares taxed on receipt under section 56(2)(x) retain their character as assets acquired by gift for determining the holding period. The previous owner's holding period is included, so a subsequent transfer may produce long-term capital gains. However, section 49(4) separately fixes the donee's cost at the value previously taxed under section 56(2)(x); it does not carry over the prior owner's cost. Consequently, indexation of that deemed cost begins only in the financial year in which it was taxed, not in an earlier ownership period.....