Gift Deed Format for Transfer of Shares to a Relative

A gift of shares is a voluntary transfer without consideration. A properly drafted gift deed can record the donor's intention, the donee's acceptance and the particulars of the shares, but the actual transfer must also comply with the applicable company, depository and tax requirements.

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Can Shares Be Gifted to a Relative?

Yes. Shares are movable property and may be gifted voluntarily and without consideration. Under Sections 122 and 123 of the Transfer of Property Act, 1882, a gift must concern existing property and must be accepted by or on behalf of the donee during the donor's lifetime. For movable property, the gift may be effected by a registered instrument or by delivery in the manner permitted by law.

Important: A gift deed records the transaction and is useful evidence of the donor's intention and the donee's acceptance. It does not, by itself, replace the share-transfer procedure required by the Companies Act, the company's governing documents, a depository participant or other applicable securities rules.

Income-Tax Treatment of Gifted Shares

Shares and securities are included within the specified property covered by Section 56 of the Income-tax Act, 1961. Where shares are received without consideration and the statutory conditions are attracted, tax consequences can arise for the recipient. However, the provision contains an exemption for property received from a "relative" as defined in Section 56.

For an individual recipient, the statutory definition of "relative" includes the spouse; brother or sister; brother or sister of the spouse; brother or sister of either parent; lineal ascendants or descendants of the individual or the spouse; and the spouse of specified relatives.

Capital gains: Under Section 47(iii), as amended with effect from 1 April 2025, a transfer of a capital asset by an individual or Hindu undivided family under a gift, will or irrevocable trust is not regarded as a transfer for purposes of Section 45, subject to the law applicable to the particular transaction.

Tax treatment can depend on the identity and residential status of the parties, the nature of the shares, cost and holding-period rules, later sale by the donee, and other facts. Obtain professional advice for high-value or cross-border transactions.

How to Transfer Shares Given as a Gift

The transfer procedure depends on whether the securities are held in physical or dematerialised form and on the type of company. Section 56 of the Companies Act, 2013 governs transfer and transmission of securities. For transfers requiring a prescribed physical transfer instrument, Form SH-4 is provided under the Companies (Share Capital and Debentures) Rules, 2014. Dematerialised securities are ordinarily transferred through the relevant depository/depository-participant process.

Check before execution: Private-company articles, shareholder agreements, contractual transfer restrictions, lock-ins, regulatory conditions and depository requirements may affect whether and how the shares can be transferred.

Sample Gift Deed for Transfer of Shares

The following format may be adapted to the facts of the transaction. Replace all blanks and verify the company/depository requirements before signing.

GIFT DEED

This Deed of Gift is made at ________________ on this ____ day of ____________ 20____.

BETWEEN

Donor: Shri/Smt. ____________________________, son/daughter/wife of ____________________________, aged about ____ years, residing at ____________________________________________________________ (hereinafter referred to as the "Donor", which expression shall, unless repugnant to the context, include his/her legal representatives and permitted assigns).

AND

Donee: Shri/Smt. ____________________________, son/daughter/wife of ____________________________, aged about ____ years, residing at ____________________________________________________________ (hereinafter referred to as the "Donee", which expression shall, unless repugnant to the context, include his/her legal representatives and permitted assigns).

WHEREAS:

A. The Donor is the lawful beneficial/registered owner of the shares described in the Schedule below.

B. The Donee is the Donor's ________________ and the Donor desires, out of natural love and affection and voluntarily and without consideration, to gift the said shares to the Donee.

C. The Donee has agreed to accept the gift.

Schedule of Shares

NOW THIS DEED WITNESSETH AS FOLLOWS:

1. Gift. The Donor, of his/her own free will and without consideration, hereby gifts and transfers to the Donee all the Donor's rights, title and interest in the shares described in the Schedule, subject to completion of all transfer formalities required by applicable law, the company and/or the relevant depository.

2. Title and encumbrances. The Donor declares that, except as specifically disclosed below, the Donor is entitled to transfer the shares and that the shares are not subject to any pledge, lien, charge or other encumbrance.

3. Acceptance. The Donee hereby accepts the gift during the lifetime of the Donor.

4. Transfer formalities. The Donor and Donee shall sign and submit all forms, instructions and supporting documents reasonably required by the company, registrar and transfer agent, depository participant, depository or other competent authority for recording the transfer.

5. Rights after transfer. Upon completion of the applicable transfer process, the Donee shall be entitled to the rights attached to the gifted shares in accordance with law and the constitutional documents of the company.

6. Taxes and charges. The parties shall comply with all applicable tax, stamp-duty, filing and regulatory requirements, if any, relating to this gift and its recording or transfer.

7. Declaration. The parties state that this deed records a genuine gift made voluntarily and without monetary consideration.

IN WITNESS WHEREOF, the Donor and the Donee have signed this Gift Deed on the date and place first written above.

Signature of Donor

Name: __________________________

Signature of Donee

Name: __________________________

Witnesses

1. Signature: ____________________   Name & Address: ____________________________________________

2. Signature: ____________________   Name & Address: ____________________________________________

Essential Details and Document Checklist

  • Date and place of execution.
  • Full name, address and identification particulars of the donor and donee.
  • Relationship between the donor and donee, especially where a tax exemption for a gift from a relative is being relied upon.
  • Company name, class of shares, quantity, face value and relevant folio/certificate or demat-account particulars.
  • Share-certificate and distinctive-number details where physical certificates are legally relevant.
  • Clear declaration that the gift is voluntary and without consideration.
  • Donee's acceptance of the gift during the donor's lifetime.
  • Signatures of the donor and donee; witnesses may also sign the deed as evidence of execution.
  • Applicable transfer form or depository instruction and KYC/supporting documents required by the company, RTA or depository participant.

Is Registration of a Share Gift Deed Compulsory?

A share is movable property. The special rule requiring a registered gift instrument and attestation by at least two witnesses in Section 123 of the Transfer of Property Act applies to gifts of immovable property. For movable property, Section 123 recognises a registered instrument or delivery. Therefore, a statement that every gift deed for shares must be registered with a Sub-Registrar is not generally correct.

Stamp duty, execution requirements and the mechanics of securities transfer should nevertheless be checked for the particular transaction and State/Union Territory, especially if a separate instrument is executed.

Official Legal Resources

Disclaimer: This page provides a general legal format and informational overview. It is not a substitute for advice based on the facts of a specific transaction. Requirements may differ for private companies, listed securities, dematerialised holdings, non-resident parties, restricted securities and transactions subject to contractual or regulatory conditions.