Before you gift shares, know who pays tax, who is exempt and key ITR rules

A simple guide to income tax rules on gifting shares in India

Good news if you're gifting shares, you owe zero tax
The old Gift Tax Act has been abolished. And under Section 47 of the Income Tax Act, gifting is not treated as a "transfer," so no capital gains tax applies either.
Gift freely. The tax burden is not yours.

Three situations where the receiver pays nothing:

1.Gift from a relative (spouse, siblings, parents, children, or lineal descendants)
2.Gift received on the occasion of your marriage
3.Gift received through inheritance

Know your exemptions before you panic.

Once you sell those gifted shares, Capital Gains Tax kicks in.
Your holding period is calculated from the date the original owner bought the shares — not the date you received them.

The cost of acquisition is also the original purchase price paid by the gifter.

The type of capital gain depends on how long the shares were held in total.
Long-Term Capital Gains (LTCG) attract a lower tax rate. Short-Term Capital Gains (STCG) are taxed at a higher rate.

File ITR-2 when reporting gains from sale of gifted shares.

Always prepare a Gift Deed when transferring shares.
This single document proves the transaction was a genuine gift and not a disguised sale — protecting you from Income Tax Department scrutiny.
No paperwork = unnecessary risk. Keep it simple, keep it documented.