Gift Shares to Your Friends and Family

With the festival of lights just around the corner, most of us are planning to give gifts to our beloved ones. Usually, people gift things like sweets and savories, silver ornaments, firecrackers, clothes, and electronic gadgets. Now, you have another cool gifting option. From this Diwali onwards, you can gift stocks, ETFs, and mutual funds to your peers and loved ones! Imagine how delighted and special your beloved ones would feel when they receive a wonderful stock in their Demat account.

Why Gifting of Shares?

We gift to show appreciation, care, love, and affection for your beloved ones by giving something of value. We generally give gifts on happy occasions such as festivals, birthdays, and anniversaries. You can make it unique by giving them something that can add value in the long term. Gifting shares or Mutual Funds could be one of the most unique ways to express how much you care about them and their future financial well-being.

You may think, "Why would I gift shares?" Good thought! Imagine you received a mobile phone worth ₹10,000 as a gift 5 years ago. The gadget was undoubtedly useful; however, its value and utility has depreciated to zero. Alternatively, if you had received ₹10,000 worth of shares of Deepak Nitrite Ltd., it would be worth 1,00,000 today! A 10x return versus a worthless gadget that cannot even be resold. Which is a better gift?

"You may now realize that gifting shares are not only a way to express your love, gratitude, and appreciation but also provide a cushion of financial security to your family and friends."

Advantages of Gifting Shares:

• Equity Shares, ETFs, and Mutual Funds provide liquidity where you can sell in time of need.
• It could generate passive income through corporate actions such as Dividends, Bonuses, Right issues, etc.
• Results in capital appreciation in due course of time.

How Does the Gifting of Shares Work?

At FYERS, the gifting mechanism is an entirely online and seamless process that can be completed in under 10 minutes. The person who is gifting is called a Gifter, and the person who is receiving the Gift is called the Giftee. The Gifter will give the shares/ETFs/mutual funds in their Demat account to the Giftee's Demat account through the CDSL Authorization (OTP). There are a few points that need to be considered to initiate the gifting procedure:

• To initiate the gifting process, you must have a Demat Account with us. If you don't have a FYERS Demat account yet, click here.
• The person you are giving the Gift to (Giftee) must hold a FYERS Demat Account. However, if the Giftee isn't a FYERS client, you can refer them through 'My Account' portal.
• The shares must be available in your Demat account and should be free of any pledge or lien. 
• Your account must not have any Debit/Negative balance in your account.

Procedure for the Gifting of Shares/ETFs/Mutual Funds.

There are two scenarios when it comes to Gifting, as listed below:

Scenario 1: If the Giftee has a FYERS Account:

• Go to My Account, and click on 'Gifts.
• Enter the PAN or registered mobile number of the Giftee and Click on 'Continue.'
• Giftee details (masked) will be displayed. Once verified, Click on 'Continue.'
• Your holdings will be displayed. Select the Scrips and quantities you wish to Gift and click on 'Continue.'
• Verify the Gift details, Type a personalized message you wish to convey to the Giftee, and Click on 'Continue.'
• A CDSL authorization link will be sent to your registered mobile number and Email ID post-market hours. Click on it.
• You will be redirected to the CDSL authorization page. Authorize the Gifting transaction using OTP sent to your registered mobile number and Email ID.
• Your Gifting transaction will be successfully initiated. To know the status of your Gift, click on 'Status.'
• You will receive a confirmation once the Gift is successfully received by the Giftee.
• The Giftee will receive an exciting notification upon receiving the gift along with the share details and a personalized message from the gifter in the 'Received' tab.

Scenario 2: If the Giftee doesn't have a FYERS account:

• Go to My Account, and click on 'Gifts.'
• Enter the PAN or registered mobile number of the Giftee and Click on 'Continue.'
• A message will appear on the top of the page stating the Giftee isn't a FYERS Client.

Enter the Giftee details to refer them to open an account with FYERS and Click on 'Continue.' Once the Giftee opens an account with us, it will be mapped under you. To know more about the refer and earn, click here.

Tax implications Arising From the Gifting of Shares/ETFs/Mutual Funds:

The taxation on the Gifting of shares differs for the Gifter and Giftee. 

• Gifter

As per the income tax act, the transfer of capital assets is taxable under the head 'Capital Gains'. However, the transfer of shares and other securities in the form of Gifts is exempt from taxes in the hands of the Gifter.

• Giftee

If the Giftee is a relative (spouse, siblings of self/spouse, children, linear ascendants and descendants of self/spouse, etc.), the Gift received is not taxable, irrespective of the value of the shares and securities.

If the Giftee is a non-relative (i.e., as mentioned in the Income Tax Act), the Gift received is exempt if the value is less than ₹50,000. However, in case of Gifts received worth more than ₹50,000, the Gift received is taxed in the hands of the Giftee under the head 'Income From Other Sources' (IFOS) at the applicable income tax slab rates. To know more about the tax implications, refer to this article.

For the library of FAQs, click here.

Conclusion:

The concept of Gifting has always been about materialistic items such as gadgets, clothing, decor, etc. However, times have changed in this post-pandemic era, where financial security has become one of the top priorities. We hope our shares and mutual fund gifting feature helps you give something unique to your beloved ones.