My mother's income tax liability for fy 13-14,

This query is : Resolved

S.Subramanian (Querist)
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05 January 2014 1.My mother, who is a family pensioner and daughter in law (my father is no more),has received Rs 2.5lacs by cheque (after my paternal grand parents passed away recently )from my uncle as part of sale proceed of my grand parents property.my uncle felt that if my father was alive,he would have got his share and hence thwey wanted to give to my mother as inheritance.My query is a) can my mother,who has been a daughter in law,claim exemption of this amount under inheritance?

2.My mother ,by virtue of inheritance of property of my maternal grand parents,has a property in kerala (which is locked) and stays in her house in mumbai (occupied) the rent for the property in kerala is rs 3000 per month and my mother pays her property tax..my query is a) does my mother need to pay wealth tax and how it shiuld be calculated.

3.since my mother's 80c is full.pls let me know other avenues where my mother can make futher investment for tax exemption

S.Subramanian

S.Subramanian (Querist)
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08 January 2014 Pls assist

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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03 August 2024 Let's address each of your queries regarding your mother's income tax liability for the financial year 2013-14:

### **1. Inheritance and Income Tax**

**a) Inheritance Exemption:**

Inheritance received from a family member is generally not taxable as income under Indian tax laws. Since the amount received by your mother (Rs. 2.5 lakhs) from your uncle as part of the sale proceeds of your grandparents' property is considered inheritance, it should not be subject to income tax. This is because, under Section 56(2) of the Income Tax Act, 1961, any sum received by an individual as an inheritance is not considered income.

- **Key Point:** Inheritance itself is not taxable. However, if the inherited property generates income (e.g., rental income), that income is taxable. In this case, the Rs. 2.5 lakhs received as inheritance is not taxable, but any income from this amount or property will be taxable.

### **2. Property in Kerala and Wealth Tax**

**a) Wealth Tax:**

Wealth tax was abolished in India with effect from the financial year 2015-16. For the financial year 2013-14, wealth tax was applicable, but only on net wealth exceeding Rs. 30 lakhs. The wealth tax was charged at the rate of 1% on the amount exceeding Rs. 30 lakhs.

- **Property in Kerala:** Since the property in Kerala is a part of your mother’s wealth, it would be included in her net wealth for the purpose of calculating wealth tax for the financial year 2013-14, if her total net wealth exceeds Rs. 30 lakhs.

- **Wealth Tax Calculation:**
- **Net Wealth:** Includes all assets owned by the taxpayer, such as properties, gold, cash, etc., minus liabilities.
- **Value of Property:** The value of the property in Kerala would be assessed as part of her total wealth.

**b) Rental Income:**

Even though the property is locked, the rental income from this property (Rs. 3000 per month) is considered as income under the head "Income from House Property" and is taxable. This rental income should be reported in the income tax return.

### **3. Investment Avenues for Tax Exemption**

Since your mother’s Section 80C limit is exhausted, here are other avenues to consider for tax-saving investments:

**a) ** **Section 80D** - Health Insurance Premiums:**
- Premiums paid for health insurance policies for self, spouse, children, and parents are eligible for deduction under Section 80D.

**b) ** **Section 24(b)** - Home Loan Interest:**
- If your mother has a home loan, she can claim a deduction of up to Rs. 2 lakh on interest paid under Section 24(b) of the Income Tax Act.

**c) ** **Section 10(14)** - House Rent Allowance (HRA):**
- If your mother is receiving house rent allowance and is paying rent, she may be eligible for HRA exemptions under Section 10(14).

**d) ** **Section 80E** - Interest on Education Loans:**
- If your mother has taken an education loan for higher education, she can claim a deduction for the interest paid.

**e) ** **Section 80G** - Donations:**
- Donations made to charitable institutions and relief funds can be claimed under Section 80G. Ensure the institution is eligible under this section.

**f) ** **Senior Citizens Savings Scheme (SCSS):**
- For senior citizens, the SCSS offers tax benefits under Section 80C with an interest rate provided by the government.

**g) ** **Fixed Deposits (FDs) with a 5-Year Lock-in Period:**
- While this falls under 80C, it is worth mentioning for future reference if additional investments are needed in future years.

### **Conclusion:**

- **Inheritance:** Not taxable.
- **Wealth Tax:** Applicable for FY 2013-14 if net wealth exceeds Rs. 30 lakhs (Note: Wealth tax abolished from FY 2015-16).
- **Rental Income:** Taxable as "Income from House Property."
- **Tax-Saving Investments:** Consider options under Sections 80D, 24(b), 10(14), 80E, 80G, SCSS, and FDs.

If you need more precise calculations or details, it’s advisable to consult a tax professional for personalized advice based on the complete financial situation.

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