Jessika Arora (CA ) (50 Points)
21 July 2009This query pertains to the meaning of 'inheritance' referred to in section 56(2) (vi) of the Income tax Act,1961. Would money received under nominationon death of a relative be taxable or exemt under the Income Tax Act?
Is nomination covered under inheritance
Prakhar Saxena
(Student)
(100 Points)
Replied 21 July 2009
Under Section 56, exemption is granted in respect of any sum of money received under a Will or by way of inheritance.
so its obvious that nomination is covered as only nominees will inherit and any money on inheritance is exempted
CA Devanshi Gandhi (Ajani)
(FCA DISA Mcom CIFRS & LLB)
(9060 Points)
Replied 21 July 2009
its exempt
Jessika Arora
(CA )
(50 Points)
Replied 22 July 2009
But i do have one reservation...one has an Fixed Deposit and he nominates a relative's name as a nominee..the person dies and thew nominee inherits the right to the FD though not automatically but through transfer in his name as mentioned in the Bank's clauses..would that take the form of inheritance as inheritance is termed as succession by descent...
Prakhar Saxena
(Student)
(100 Points)
Replied 24 July 2009
I think Principal Amount of FD will be exempt and only interest on FD will be taxable under other sources.
And inheritance is not always by succession, a nominee may or may not be a successor but he will inherit.
CAclubindia
