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Reader’s question: How do you transfer stocks as a gift to one's spouse or children? - Premkumar Kambisseril
Your daughter just turned 18. Or your spouse has been talking about wanting to invest. Or you simply want to pass on a stock you believe in to someone you care about.
Gifting shares is simpler than most people assume. The transfer costs almost nothing and requires no lawyers. But before you start, there is one thing worth understanding clearly because it catches almost everyone off guard.
Getting the recipient ready
Before any share can move, the person receiving them needs a demat account, a digital account that holds shares electronically, the same way a bank account holds money.
For a spouse, a standard individual demat account works. For a child under 18, you open a minor demat account in the child's name. A parent or guardian operates it until the child turns 18, at which point it becomes a regular account in their own name. Once the account exists, the transfer can happen in one of two ways.
The quick way and the alternative
If your broker offers an online gifting facility, the process is straightforward. You log in, find the gifting option, enter the recipient's demat account details, select the shares and quantity and verify the transfer with a TPIN and OTP. Some brokers ask the recipient to accept the gift before it goes through. Others process it directly. Either way, the shares arrive within a day or two.
If your broker does not offer this, you use what is called an off-market transfer. This is a standard process governed by India's two depositories, CDSL and NSDL, which maintain records of all share ownership in the country. You fill out a Delivery Instruction Slip, or DIS, available from your broker. If you prefer doing it digitally, CDSL has a platform called Easiest and NSDL has one called SPEED-e.
The DIS asks for four things: the recipient's DP ID and Client ID, which together identify their demat account; the ISIN of each share being transferred, a unique 12-character code that identifies that specific stock; the quantity; and the reason, which should be noted as "Gift." Submit it to your broker, complete the verification and the shares move.
One thing to budget for: Off-market transfers attract a fee, usually charged per ISIN, meaning each different stock counts as a separate charge, plus GST. The amount varies across brokers, so worth checking before you start.
The tax part
Under Section 56(2)(x) of the Income Tax Act, gifts between specified relatives are exempt. Spouses and children qualify. No gift tax, no capital gains at the point of transfer, regardless of how much the shares are worth.
What trips people up is what happens after.
If you gift shares to your spouse, any dividends or capital gains those shares earn are added back to your income under Section 64, the clubbing provision. The law exists precisely to prevent people from shifting income to a lower-tax family member by moving the asset. The shares leave your account. The tax on their future income does not follow them.
The same applies to a minor child. Dividends and gains are clubbed with the income of whichever parent earns more. Section 10(32) gives a small relief: up to Rs 1,500 per child per year is exempt. But beyond that, the income lands on the higher-earning parent's tax return.
The exception is an adult child. Once your child is 18 or older, clubbing does not apply. Future income and gains from the gifted shares are taxed entirely in their hands. A gift to an adult child is a clean transfer of the asset and its tax life.
One more detail for when the recipient eventually sells. They inherit two things from you: your original purchase price and your holding period. So if you bought shares at Rs 100 and held them for two years before gifting, the recipient's cost of acquisition is Rs 100 and their holding period starts from when you first bought, not from the date of the gift. This matters because it determines whether gains are taxed as short-term or long-term when they sell.
Keep one document
A gift deed is not legally required. But it can save a long conversation with the tax authorities later. It should include the names of both donor and recipient, the name and ISIN of the shares, the number of shares and a line stating the transfer is voluntary and made without any payment in return. If questions ever arise, this document answers them.
One more thing worth considering before you gift: is this the stock you would buy today, for someone just starting out? Value Research Stock Advisor studies businesses for exactly this kind of long-term holding, so the shares you pass on are ones worth holding, not just ones you happened to own.
Know which stocks deserve that trust.
This article was originally published on June 30, 2026.
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