It is that time of the year again and we just can’t keep calm. All of us plan to celebrate the upcoming festivals with great enthusiasm. Coronavirus has dampened the experience to some extent but the show must go on! A very important aspect of the festivals like Diwali, Bhai Dooj etc. are gifts. Yes! This time around, when I was thinking of giving cash to my brother (like every year). I decided to do it something differently and that is when a notification by Zerodha taught me: how to gift shares to your loved ones!

Who the hell gifts stocks?

Well, every year, my father and grandfather gave all of us some fancy envelopes filled with cash. We loved it. Duh! And this went on for about 9 years. This time before Diwali, at a dining table conversation, I asked everyone else in my family that what did they do with all the cash collected during past Diwalis. And answer was pretty simple, they spent it. Don’t know where. When I asked about savings, they all had given it a thought at least once, but no one managed to do it given the Diwali mood and related expenditure. One of us even gambled using that money.

So I jotted down certain points which helped me reach to this decision:

• Gifting Stocks is an instant saving. It is like PF which gets deducted before the salary reaches your account. So, there is no option of spending it immediately.

• Unlike cash, which even if it is saved in physical format, this gift (a cash equivalent) will continue to grow in a long run.

• Gifting is governed by a purely digital transaction. No logistics involved (those pretty envelopes aren’t required any more)

• You give the receiver a head start in terms of savings for the new year (as per Hindi calendar)

• Actions speak louder than words. You should not only preach the habit of savings but also do a bit of handholding as and when required. Specially in Punjabi families. This was the best way of doing it.

How to Gift Shares:

Thumbs up to Zerodha for making this process as simple as possible. There are a few technicalities involved in this method which I would like to highlight before we dive in:

• The sender and the receiver both need to have a demat account with Zerodha. (In case you don’t, Zerodha opens it in less than 24 hours)
• You need to have the shares you want gift in your demat account as a holding (purchased and held for more than 2 working days).
• The charges for this transaction ₹25 or 0.03% of the value (whatever is higher)
• The gift is tax free for the receiver till ₹50,000 of the value.
• To calculate the P&L and buy averages, the gift trade will be entered at the previous closing price available of the stock on the day the transfer. The holding transferred by the sender of the gift will be closed at the previous closing price of the stock, and the average price for the receiver of the stock will be the same closing price of the stock.

Step by Step guide:

–> Head to stock gifting page on Zerodha console using this link.

–> Enter the receiver’s name and/or Email ID.

–> Select the stocks and quantity you want to gift as show below.

–> After you confirm, an Email and SMS is triggered to the receiver with a link where he has to accept that gift

–> Once approved, you will get a notification via mail and SMS to complete the transaction. You need to confirm the gift here using your CDSL PIN (which you use for selling your holdings generally).

–> Once you have approved the debit of shares, Zerodha will set up an off market transaction for you. Watch out for a mail and SMS from CDSL for a link to approve this transaction. At this point you need to have your PAN number handy. An OTP is triggered and once you put that, the transaction is completed.

Conclusion:

I personally feel that this was the best gift I had ever given to my brother. Giving someone a better tomorrow, a practical lesson in savings is absolutely delightful. I am sure I’ll be using this functionality offered by Zerodha on many more occasions.