My father has some shares in his demat account with me as a joint holder. He expired recently. Now I will have to transfer 50 percent of the total value to my sister. Will it attract short term capital gain tax if transferred within 1 year? If yes is there any way it could be reduced
Even if the account is held jointly, after your father's demise, you do not have the right to transact. Check with the Bank, there maybe some paperwork required.
As both you and your sister have agreed on split, it is advisable to open a Demat account in your sister's name. Transfers the shares into her account in her name.
If she decides to sell, she is liable to pay short term or long term tax depending on when she sells. From Tax point of view, the date when your father expired would be treated as the date she has acquired the shares. The value of acquisition would be the as on that date.
For example your father purchased shares on 1-Jan-2014 of value Rs 100. His demise was on 1-Sep-2014 and the value of shares was Rs 200. If your sister sells the shares before 1-Sep-2015 it would be short term gain else long term. If the sale value is Rs 250, her gain is only Rs 50.
If your sister needs funds sooner and you have funds, you can gift your sister the said money and she can gift you the shares. Between brothers and sisters there is no limitation on gift and it is exempt from gift tax.
Please consult a CA who would help you with paperwork in either case.