Transfer of Shares
Initiating the transfer
The person giving the gift is termed the donor, and the person receiving the shares is termed the donee.

The shares can be transferred by initiating an off-market transaction. An off-market transaction is initiated by the donor with his depository participant (DP) by submitting a delivery instruction slip (DIS) to transfer securities from his depository account to that of the donee.

The DIS should have the name of the donee's DP, of the security being transferred, ISIN number of the company and quantity of shares being transferred. The donee must give a receipt instruction to his DP to accept the shares, if he has not already given a standing receipt instruction.

Deed execution
Though it is not compulsory, it is best to execute the gift deed on a non-judicial stamp paper of appropriate amount for legal record and to avoid any tax queries in the future.

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(Posted date - 09 Dec 2012)
Share certificates
If the shares are in certificate form, a share transfer deed in Form 7B, filled and signed by the donor, needs to be executed and registered. The stamp duty is payable at the rate of 25 paise for every Rs 100 of the face value, or the market value of shares prevailing on the date of the document, whichever is higher.

Points to note
1. The details mentioned in the delivery instruction slip and receipt instruction for off-market transfer must match, otherwise the transfer will not take place.

2. A gift from a relative (as defined under the Income Tax Act) or of a value less than Rs 50,000 are not liable to be taxed in the hands of the donee.

3. Paper shares can be converted to the demat form by the donor before gifting. This will save stamp duty on the transfer.