Siddhivinayak Temple to accept shares as offerings, here are tax implications

By: | Updated: July 20, 2016 10:04 AM

Under the present tax laws, transfer of shares within one year of purchase with capital gains will be taxed at the short-term capital gains rate of 15 per cent. However, if the share transfer happens after a year and STT has been paid, the capital gains tax is nil.

However, before you rush to transfer your shares to the temple's trust, you should be aware of the tax implications.Under the present tax laws, transfer of shares within one year of purchase with capital gains will be taxed at the short-term capital gains rate of 15 per cent. (Reuters)

Mumbai’s famous Shree Siddhivinayak Temple has tied up with SBICAP Securities to allow devotees to donate shares as offerings.

However, before you rush to transfer your shares to the temple’s trust, you should be aware of the tax implications.

Under the present tax laws, transfer of shares within one year of purchase with capital gains will be taxed at the short-term capital gains rate of 15 per cent. However, if the share transfer happens after a year and STT has been paid, the capital gains tax is nil.

“A devotee who transfers shares within a year of purchase will have to bear the 15 per cent tax on the capital gains,” Sudhir Kaushik, Co-founder and CFO, Taxspanner.com told FeMoney.

Thus, if the purchase value of the share is Rs 100 and the present market value is Rs 150, tax on the Rs 50 capital gains has to be paid if transferred within a year.

Kaushik, however, said that the transferor can avail tax deduction under Section 80G of the Income Tax Act. “The entities must have a certificate under Section 80G from the Income Tax department to accept such donations which will be eligible for tax deduction . Normally, donations to entities such as temple trusts provide you a 50 per cent deduction on the amount donated. Very few entities such as Prime Minister’s Relief Fund provide 100 per cent tax deduction under Section 80G,” Kaushik said.

Under the agreement with SBICAP, the Siddhivinayak Temple’s trust has opened a demat account to allow share donation on an electronic platform. The facility will be expanded to other financial instruments including mutual funds, bond and gold through the electronic transfer route.

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