Azim Premji, the founder of Wipro, has given his two sons Rishad and Tariq over 1 crore shares worth ₹500 crore. Until this week, the 78-year-old software entrepreneur had about 22.58 crore shares in the corporation. According to stock market statistics, Premji gifted his elder son Rishad and his younger son Tariq 51,15,090 shares apiece. Rishad is presently the chairman of Wipro, and Tariq works at the Azim Premji Foundation.
On January 20, the day Premji gave over the shares to his sons, Wipro’s shares finished at ₹ 484.90. The 1,02,30,180 shares are valued at ₹496 crore.
“I, Azim H Premji, wish to intimate you that 1,02,30,180 equity shares of Wipro Limited held by me, amounting to 0.20 per cent of the share capital of the company were transferred to Rishad Azim Premji and Tariq Azim Premji in the form of gift,” according to a filing released by Wipro on Wednesday.
Wipro’s founding family members now possess 4.43 percent of the company’s shares. Premji holds 4.12 percent of the shares, while his wife Yasmeen owns 0.05 percent. Both of their sons possess 0.13 percent each.
However, the proposed transaction will have no effect on the total promoter and promoter group shares in the firm, which will not have any change. According to another Wipro filing, Rishad Premji got 51,15,090 equity shares of Wipro Ltd as a gift from Azim Premji.Tariq Premji received a similar notification notifying him that Azim Premji had likewise granted him 51,15,090 equity shares of Wipro Ltd.
According to the report, the promoters controlled 72.9% of Wipro at the end of the previous year. Hasham Traders, Prazim Traders, and Zash Traders collectively hold 58%. The Azim Premji Philanthropic Initiatives and Azim Premji Trust hold 0.27 percent and 10.18 percent, respectively. Hasham Investment and Trading Company owns the remaining 0.03%.
Wipro Q3 results
On January 12, the business recorded a roughly 12% reduction in consolidated net profit at ₹2,694.20 crore for the third quarter ended December last year.
In the December quarter, consolidated revenue from operations fell by 4.4% to ₹22,205.1 crore, compared to ₹23,229 crore the previous year.
“To be clear, the general demand situation remains cautious. Clients continue to make conservative investments, seeking efficiency, higher returns on investment, and better optimisation of existing investments. But we’re seeing some hints of progress.” Wipro’s CEO and Managing Director, Thierry Delaporte.
What are the benefits gifting of shares?
A gift is an amount of money, moveable property, or immovable property received for no or insufficient compensation. Section 56(2) of the Income Tax Act makes provisions for taxation on given shares. A gift of more than INR 50,000 is taxed as Income from Other Sources (IFOS) at slab rates. The present received from a relative, on the occasion of marriage, as inheritance, or in anticipation of death is tax-free.
The Gift Tax Act (GTA) was abolished in 1988, therefore senders are no longer required to pay taxes on gifts.
According to Section 2(14) of the Income Tax Act, shares and securities constitute capital assets. The transfer of a capital asset is subject to capital gains tax. However, the concept of ‘transfer’ under Section 47 clearly excludes gifts. As a result, the gift of shares and stocks is tax-free in the hands of the sender.
Shares and securities acquired from a relative are exempt income because a gift from a related is exempt under Section 56(2)(vii). If the monetary value (FMV) of shares or securities exceeds INR 50,000, the gift is considered IFOS income and is taxed at slab rates.
Shares and securities received on the occasion of marriage, inheritance, or in contemplation of the payer’s death are exempt income since such gifts are exempt as per Sec 56(2)(vii).
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