According to the Indian income tax laws, dividend income earned from shares and mutual funds is exempt from tax, whereas any capital gains earned from selling shares and mutual funds are taxable. Therefore, if one does not intend to sell the shares in the near future, they will not be liable to pay tax on the same. However, once the shares are sold, any capital gains earned will be liable to capital gains tax, depending on the holding period of the shares.

You must disclose the share inherited by you in your income tax returns 

you don’t have to pay tax on your inheritance 

You need to only pay the income tax if you sell them and earn profit on it

you were only appointed as a nominee

so legally you are not entitled to the shares 

you cannot sell the shares

and if you sell the shares then you would be held accountable to the legal heirs of the deceased owner of these shares

if there are no class 1 legal heirs of the deceased like widow and children then the shares would go to the legal heirs falling in the subsequent class of legal heirs

if you have sold these shares then you have to declare the sale proceeds in your IT returns

it would be inheritance . 

CA would guide you regarding filing of income tax returns and disclosure of transfer of shares 

You can receive the same and no tax liability for receipt of the shares unless you earn proceeds from it

Actually nominee in this context refers to a trustee to take custody of the assets of the deceased to distribute the same in future to the legal heirs of the deceased.

The nominee cannot enjoy the properties/assets so inherited for his own self.

A nominee is not the rightful owner or the legal heir of the assets but only holds them in trust in the event of the death of the asset holder. 

As a nominee you can inherit the shares but remember that you are just a trust to the assets inherited.

You cannot sell the shares though you can enjoy the dividends.

Legally put, a nominee does not get an interest, title or ownership in assets of the nominators. After the death of a person, all their assets—-including the fund in his various bank accounts, PF account, PPF account, FDs, RDs, etc. —go to their legal heirs.

 the role of the nominee is of an intermediary. The nominee basically receives and distributes the funds on behalf of others.

In most cases, appointing a nominee is an optional choice. However, it is in the interest of an account holder to appoint a nominee. This will ensure the transfer of assets takes place in a smooth manner with a custodian in the form of the nominee taking care of the business.

Yes, you need to disclose the shares received as a nominee in your grandfather's friend's demat account in your tax returns for the year 2022. Even though there is no inheritance tax in India, you may be required to pay tax on any income earned from the shares.

The tax liability on the shares will depend on the period of holding and the type of shares received. If you sell the shares after holding them for more than one year, the gains will be considered long-term capital gains, and you will be taxed at a lower rate of 20% (plus applicable surcharge and cess). However, if you sell them before holding them for one year, the gains will be considered short-term capital gains and will be taxed as per your tax slab.

Additionally, you may also have to pay tax on any dividends earned from the shares. Dividends are taxed at a flat rate of 10% (plus applicable surcharge and cess) for individuals.

Therefore, it is advisable to consult a tax professional for guidance on how to disclose and report the shares received in your tax returns and to understand your tax liability on the same.