NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Capital Gains
Meera received listed equity shares as a gift from her father. He had bought them three years ago for Rs 2,00,000. Meera sells them on the exchange four months after receiving them, with STT paid. How is the gain treated?
The gain is long-term and the cost is Rs 2,00,000. When an asset is received as a gift, the previous owner's holding period is added to the recipient's, and the previous owner's cost of acquisition is used. The gift is not a taxable transfer.
- AShort-term gain, as Meera held them only four months, with cost as the market value on the gift date
- BLong-term gain, with the holding period including the father's period and cost taken as Rs 2,00,000Correct
- CLong-term gain, with cost of acquisition taken as nil because it was a gift
- DShort-term gain, with cost of acquisition taken as nil
Explanation
For gifted assets, the holding period of the previous owner is included and the cost is the previous owner's cost of acquisition. The father held the shares for three years, so the asset is long-term for Meera, and her cost is Rs 2,00,000. The gift itself is not a transfer for capital gains, so a nil or gift-date cost is wrong.
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