How much does it cost to gift shares?


Valentine’s day is around the corner and I am sure you have already planned a surprise gift for your loved ones. One more thing I am sure of is that CARR students will plan a financial gift for their loved ones. And when it comes to financial gifts, the first choice will obviously be shares. But before you gift shares to your loved ones, you must consider the costs associated with it in the form of charges and taxation.

1. Charges for gifting shares:

Let us say that I have decided to gift a few shares of different companies that I think are good to my husband. It will cost me 0.03% (of gift value) or Rs.25/-, whichever is higher. Additionally, GST @ 18% will be levied on the charges. The Gift charge is charged per company or ISIN. The following example will clear the doubts –

I have decided to gift shares of Jubilant Food Works, Bharti Airtel, and D Mart, before we go ahead let me be very clear that this is not a recommendation. So, the gift charges will be:

There are a few things to keep in mind while calculating the charges
i. The highest closing price of the stock between NSE and BSE is considered for computation
ii. The charges are computed by considering the highest closing price on the day the gift transaction is processed
iii. Charges are rounded off to two decimal places
So that is it about the charges. Now there is another cost involved in gifting shares and that is taxation. Let us see what do we have there.

2. Taxation on gifting shares:

As per the Income Tax Act, 1961 a “gift” can be in the form of money and movable/immovable property that an individual receives from another individual or organization without making a payment. In legal terms, the person or organization providing the gift is termed the transferor while the gift receiver is known as the transferee.
Simplifying the definition further, examples of gifts that are taxable in India include:-
i. Money received by cash, draft, cheque, bank transfer, etc.
ii. Immovable property such as land, building, residential/commercial property.
iii. Movable property such as jewelry, shares, ETFs, bonds, paintings, sculptures, etc.

Now that we know what can be said as a gift let us understand the taxes levied on the transferor as well as the transferee


I. Tax in the hands of transferor:

The transferor is not liable to pay any tax on gifts. As per the Income Tax Act, Capital Gains is charged on the transfer of a Capital Asset. But, section 47 specifically excludes ‘gift’ from the definition of ‘transfer’. Therefore, the transferor of a gift is not liable to pay income tax.


II. Tax in the hands of transferee :

    A. On receipt of the gift

Section 56(2)(x) of the Income Tax Act, 1961 states that the Gift of movable property such as shares, ETFs, mutual funds, etc. received without consideration and exceeding Fair Market Value of more than Rs. 50,000 is taxable in the hands of the transferee as ' Income from Other Sources ' and tax should be paid at slab rates. This means if the gift amount is Rs. 50,001 then tax is to be paid on the entire Rs. 50,001 and not just Re. 1. Hope this point is clear. There are certain exemptions to it –
          a) Gifts received from any relative. Relative here means:
              a. in case of an individual—
                 i. spouse of the individual;
                 ii. brother or sister of the individual;
                 iii. brother or sister of the spouse of the individual;
                 iv. brother or sister of either of the parents of the individual;
                 v. any lineal ascendant or descendant of the individual;
                 vi. any lineal ascendant or descendant of the spouse of the individual;
                 vii. spouse of the person referred to in items (ii) to (vi); and
             b. in the case of a Hindu undivided family, any member of the HUF; or
          b) Gifts received on the occasion of the marriage of the individual; or
          c) Gifts received by way of inheritance.
In the above three exemptions, there shall be no tax irrespective of the fair market value of the gift received.

    B. On the sale of the gift

The subsequent sale of the gift by the receiver would be taxable under the head Income from Capital Gains. To determine the nature of capital gains whether STCG or LTCG, the holding period would be determined from the date of purchase by the previous owner i.e. the transferor till the date of sale by the transferee. To compute the capital gain, the cost of purchase by the transferor would be considered as the cost of acquisition.

I hope now you have got some clarity on the taxation of gifts. It can be confusing at times, so many people tend to simply ignore it. But, having an idea about taxation helps you take an informed decision. So, if you are planning to get a gift for your special ones this valentine’s day don’t forget to watch my valentine's day special video releasing on Saturday 12th February 2022 at 9:00 PM on my YouTube channel. Until next time!


How much does it cost to gift shares?
What is HRA?


Let’s say you have received a job opportunity in a big city, far away from your home town. It’s the job of your dreams in the city of dreams, Mumbai!
While discussing with your friend about moving to Mumbai for this amazing job, he tells you about how exciting but challenging it is to live in Mumbai; the crowded local trains, the need for you to constantly be on your toes, and the most important thing, the rent expenses being sky-high.
After giving it a thought, you realize, you are quite excited about the fast life and travelling in local trains, but, oh no!! What about the high rent expenditure? How will you manage that? Will your employer give you any extra money in addition to your salary for the rent expense?


Let’s find out...
Why HRA?
Salaried individuals often need to move out of their respective home towns to big cities for work. Most of them opt for living in an apartment on rent, rather than purchasing property, as it is economically beneficial for them.Keeping the high rental expenses in mind, many employers choose to give an allowance for the rent paid by their employees. This allowance forms part of their salary.

What is HRA?

HRA (House Rent Allowance) is a benefit given by the employer to the employee for his house rent expenses. Okay then! You check your offer letter and YASS! Your problem is solved! Your gross salary includes HRA! But wait, what about the increased tax liability on the increased income? Well, that problem will also be solved in a few minutes!

Tax benefits of HRA
Although the allowance leads to an increase in gross salary, it is not fully taxable under the Income Tax Act, 1961. As per section 10(13A) of the Income Tax Act,1961, read with Rule 2A of the Income Tax Rules, the least of the following will be exempted, and will not form part of the taxable income:

1. Actual HRA received
2. 40%/50%* of salary**
3. Actual Rent paid in excess of 10% of salary**

Salary for this purpose = Basic salary + Dearness allowance (In terms i.e. forming part of retirement benefits)
** 50% for metro cities (which includes Chennai, Kolkata, Delhi, Mumbai) and 40% for other cities
I know, this complex calculation is beyond the understanding capacity of a layman. But don’t worry, let’s see some examples to understand this calculation better.
Example 1:
Let’s say, Mr P, residing in Mumbai has the following receipts from his employer:
Basic Salary (pa) Rs.8,50,000
DA (In terms) Rs.20,000
HRA received Rs.4,20,000
Actual rent paid Rs.5,30,000
Therefore, the exemption shall be the least of the following.
1. Actual HRA received – 4,20,000 
2. 50% of salary - 4,35,000
3. Actual rent paid (–) 10% of salary – 4,43,000 (5,30,000 – 87,000)
Exemption = Rs.4,20,000



Example 2:
Mr. X, residing in Pune has the following receipts from his employer:
Basic Salary (pa) Rs.6,50,000
DA (In terms) Rs.15,000
HRA received Rs.2,40,000
Actual rent paid Rs.3,00,000
Therefore, the exemption shall be the least of the following:

1.  Actual HRA received - Rs.2,40,000
2 .40% of salary – Rs.2,66,000
3. Actual rent paid (–) 10% of salary – Rs.2,33,500 (3,00,000-66,500)
Exemption = Rs.2,33,500



Some important points to keep in mind:
1.From FY 2020-21 (AY 21-22), taxpayers have an option to choose from two tax regimes, old or new. So, individuals opting for the new tax regime will not get the benefit of any exemptions, which includes HRA. However, if an individual chooses to opt for the old tax regime, he/she will get the benefit of the exemption.
2.HRA is fully taxable for employees who do not pay any rent or the accommodation occupied is owned by him/her.
3.To avail of the HRA exemption, the employee has to provide rent receipts to the employer as proof of rent payment.
So, I hope you now know what HRA (House Rent Allowance) is and how it is taxed. Until next time!
What is HRA?
Stock Split Concept
1. A stock split is a corporate action in which a company divides its existing shares into multiple shares to boost the liquidity of the shares.

2. The primary motive is to make shares more affordable for retail investors even though the underlying value of the company has not changed.

3. Since many retail investors think that the stock is now more affordable, they buy the stock and end up boosting demand which drives up prices. So, it results in an increase in share price following a decrease immediately after the split.

We can see this market reaction reflecting in the example of the Apple Stock split in June 2014. Apple Inc. split its shares 7-for-1 to make them more accessible to a larger number of investors. Right before the split, each share's opening price was approximately $649.88. After the split, the price per share at market open was $92.70, which is 648.90 ÷ 7.


The day after the stock split, the price had increased to a high of $95.05 to reflect the increased demand from the lower stock price.

The scenario of Stock Split in Indian Markets

On 22/05/2019, HDFC Bank announced a stock split of 1:1 (Old Face Value- 2, New Face Value- 1)Following were the key dates:

1.Record Date: 20/09/2019- determines which shareholders are entitled to receive additional shares due to the split.

2.Ex-Split Date: 19/09/2019- ex-date is usually set one business day prior to the record date since India follows a T+2 rolling settlement for delivery of shares.

To be eligible for a stock split, investors need to buy the stock at least on or before 18/09/2019 because the stock price will be split-adjusted on 19/09/2019. So, the record date is very important for shareholders to be eligible for a stock split because of the T+2 settlement.


The scenario of Stock Split in USA Market

Apple Stock Split Timeline 2020:There are several key dates.

1.The Record Date – August 24, 2020 - determines which shareholders are entitled to receive additional shares due to the split.
2.The Split Date – August 28, 2020 - shareholders are due to split shares after the close of business on this date.
3.Ex-Date – August 31, 2020 - the date determined by Nasdaq when Apple common shares will trade at the new split-adjusted price.

If you notice, Ex-Date in the USA stock market is after the record date! In USA markets Ex-Date is the most important date. This means that even if you buy the stock on 28th August 2020, you will be eligible for a stock split because the stock price will be split-adjusted after market hours on 28th August 2020. There is no significance of record date left in the USA stock market. Please note that 29th August and 30th August are holidays for the stock market.


This is clarified by FAQ on Apple’s website:
What happens if I buy or sell shares on or after the Record Date and before the Ex-Date? If you sell shares on or after the Record Date (August 24, 2020) but before the Ex-Date (August 31, 2020) you will be selling them at the pre-split price. At the time of the sale, you will surrender your pre-split shares and will no longer be entitled to the split shares. Following the split, the new owner of the shares will be entitled to the additional shares resulting from the stock split. If you buy shares on or after the Record Date but before the Ex-Date, you will purchase the shares at the pre-split price and will receive (or your brokerage account will be credited with) the shares purchased. Following the split, you will receive (or your brokerage account will be credited with) the additional shares resulting from the stock split. 


Source: you are still not clear about the difference between a stock split concept in India and the USA, you can watch a detailed video on our Youtube Channel.


Block Deal
Stock Split Concept
Basic things to look in Insurance

Many people find it difficult to buy insurance online directly, and hence they take the help of an insurance agent and end up paying high insurance commissions. 


Insurance companies commission rates range from 7% to as high as 40%, 

Do you know that depending on insurance plans and tenure of the plan the commission varies and hence we have tried here to decode the jargon terms related to insurance so that an individual can buy insurance plans online without the help of an agent and thus save on the commissions? Also buying online plans has become more beneficial because nowadays some insurance companies provide discounts on the premium amount if you buy it online, or if the amount is paid via credit card.



1. Sum Assured:

The sum assured is the guaranteed amount that the policy-holder will receive in case of death/permanent disability.

2. Rider:

Riders are additional features to enhance the scope and benefits of a life insurance policy.
For instance, in addition to life coverage, a subscriber can avail of riders like accidental death benefit rider and accidental permanent disability benefit rider which might help the policyholder get a claim in case of death in an accident.
Riders are beneficial for policyholders because there is no need to again purchase a separate policy for particular purposes.
3. Bonus:
To be eligible for bonuses, the policy should be participating in nature. It enables the policyholder to share the profits of the insurance company. It is also known as a “with-profit policy”.
Bonuses declared every year depends on the profitability of the insurance company, it is not fixed in nature.
4. Life Insured & Nominee:
Life insured is the person whose life is covered by the insurance company
The nominee is the legal heir of policyholder, who is entitled to receive the proceeds from the insurance company

5. Free–look period:

The Free-look period is a time period during which you can return the policy if you are not satisfied with what you wanted.
The Freelook period is generally 30 days from the date of receipt of the policy.
But there is a caveat attached by insurance companies while returning the premium paid (including taxes),
Proportionate risk premium (including taxes) and
Expenses incurred during medical examination (if any) and stamp duty
are deducted and all rights and benefits will now be extinguished

6. Surrender charges:

If a policy-holder for some reason does not want to continue its policy, it can be surrendered by paying a surrender charge.

7. Claim Settlement Ratio:

The claim settlement ratio (CSR) is the percentage of claims the insurer has paid out during a financial year.
For instance, if the death claim settlement ratio of an insurer is 95 percent, it means that the insurer has settled 95 death insurance claims out of every 100 insurance claims received.
"Higher the claim settlement ratio, better it is for policy-holders because it indicates the insurer's commitment to its policy-holders. Hence, a higher claim ratio is one of the parameters for a policy-holder to consider buying a policy from a particular company.


Basic things to look in Insurance