My father has died recently and both I and my mother has inherited a substantial amount of money after this. I am a salaried professional and my mother is a housewife. I am a little confused on how to fill ITR for this? 1. Should I fill ITR1 or some other form? 2. Which ITR form should my mother fill? 3. Will the inherited money be taxable or will the interest earned on it will be taxable? Besides, I have also a) lost some money in legal gambling and b) earned some in trading. Which ITR form should I fill and what all should I declare?
If you have business(trading) income then you have to file ITR, Loss of gambling income will not be adjusted against your trading income.
Further I didn't understand clearly what doesn't mean of inherited money whether it's bank balance or something else.
Further if u have share trading income then we have to see whether it's capital gain or business income.
Dear Sir
1) There is no such requirement to show inherited money in ITR. Income from inherited money is taxable and needs to be disclosed in ITR.
2) You are having salary as well as trading income. You can use ITR-2.
3) Your mother needs to file ITR if she is deriving taxable income from inherited money.
Thanks
Hi, thanks for the answers. Yes, by inherited money, I mean the sum of father's bank balance + PF amount from job + Gratuity and other payments from job + Pension for my mother Also, it is a bit surprising to me as I and my mother need to pay income tax once again on the amount my father earned (and hence already paid the corresponding income taxes). I am very novice in the matters of tax filing etc and do seek professional help in this matter. If anybody is interested in this please let me know how I can contact you to get your valuable service.
Hi,
First of all, the amounts of money or property that you or your mother has received out of your father's inheritance is exempt from taxation. Any further income earned would be taxable.
The money you have earned in trading is business income which would be required to be declared in itr 3. The money you have lost, i believe is futures and options (legal gambling) thats business losses, again same the tax return is required to be filled.
Thanks
Damini
Dear Sir,
You need to file your father ITR as legal heir. The amount received by your mother on the death of your father is totally exempt from income tax.However when your mother earns any taxable income from inherited money, she is liable to file ITR and pay tax.
You can contact me through phone consultation on taxfull.
Thanks
Hi,
You need not pay taxes on the inherited amount. However, any income derived from these funds will be taxable in your/ your mothers hands.
You can get in touch with me through phone consultation and i can help you in your further queries.
Regards,
Nikhil.
Hi,
Inherited money received by you and your mother is totally tax exempt. However, interest earned on that money is taxable.
You can show inherited money in your ITR under exempt income section.
Considering that you have income from legal gambling, it's considered as speculative business income and you should file ITR 3.
Your mother can file ITR 1.
You can get in touch with any of us through phone consultation.
Hi
Firstly, if your father had taxable income in the year of death, his ITR needs to be filed by the legal heir.
For inheritance money, it is exempt income and has to be shown in respective ITRs as exempt income. Any further income from inheritance money shall be taxable.
Your mother can file ITR 1.
Since you have speculative business loss and also trading income ( which can be shown as either business income or capital gains), you need to file ITR 3.
We are here for tax advice and we may also help you with return filings. You may contact us through phone consultations.
Hi
Now I understood your all points
Primafacie all these incomes will be exempt in your hand/mothers hand, but there is capping of monetary limit to avail exemption. So I need to know the exact figure of all that money to answer better.
I will connect you soon.
Regards
CA Varun Chawla
Ph. No. [deleted]
Here are the answers
1. ITR 3 is required to be filled by you for the F. Yr. 2017-18, for the simple reason you have income and losses from gambling and trading. This ITR is for people who have income from Business and Profession, and gambling, share trading, etc. counted within the Business and Professional Income.
2. Your mother, if she has any income, will need to file ITR 1, provided her income is not above Rs 50 Lakhs in last year.
However, these answers (1 and 2) are valid for F. Yr. 2017-18 (A.Yr. 2018-19). If you have these affair in the current F. Yr. (2018-19), the ITRs will be filed next year after 1 April 2019, and there may be different ITRs then. So depends when you earned or lost money in gambling/trading.
3. Inherited money is not taxable at all. There is NO double taxation of the money already taxed in the hands of your father. However, the income you and your mother are going to earn on the investments using the inherited money will be taxable in your respective hands. There is a legal way to save taxes by way of putting all the money in a separate bank account opened in he name of your HUF (with your mother and you being members and you being Karta) - and then using that money to buy investments/properties further in HUF name. In case you are married, its better to keep your share of the inheritance in the HUF account (you and your wife will be the members and you the Karta). Your mother can continue to hold the investments in her individual name, assuming she does not have any huge income to push the rate of tax to beyond 20-30%. All depends on what are your current state of affairs. HUF is a legal way to make investments in Family (HUF) name so you get all exemptions, deductions, and exemption slabs, in addition to your individual income related exemptions. HUF would need to have a separate PAN number, and you can say the day the HUF was formed was the day of your parent's marriage, and that you are the current Karta after your father passed away. In case of you and your wife form an GUF, the date of your marriage will be considered as the date of formation of the HUF. Find me on Linkedin - amitnarula for more details. I also need to understand which School of Thought you follow for HUF - Dayabhagh (prevalent on West Bengal) or Mitakashara (rest of India). Situation may be different in these two cases.
Disclaimer - These are my personal opinions based on my understanding of law and I cannot be held responsible for any action taken based on the above opinion. Please seek expert advice before taking any action.
The interest earned only will be taxable.
Moreover the amount received by you and your mother is non taxable.
No loss from gambling is deductible.
Trading income taxability depends on whether it is speculative or capital Gain
Money received inheritance is fully exempted.No need to pay any tax on that amount.
Further when you will invest That amount ,any income generated from that will be taxed in your hands.
Secondly about your speculative income and losses,you can file itr 3 and can file it along with your salary income.
You can take phone consultation and get in touch for further assistance in return filling.
