Money Received as Nominee

Hello,

Sorry for your loss.

First, any asset such as money or mutual funds investments received by way of inheritence after your uncle's demise are not taxable in your hands. 

However when you will further distribute these assets without consideration, it will be regarded as a gift in recipient's hands and needs to be analysed accordingly.

Going by the limited facts stated above, I believe that the seven people mentioned above won't get covered within the defination of relative if you are the donor and therfore the further distribution should be taxable if the value of asset in each individual's hands more than INR 50k  

Second, in case you choose to liquidate the mutual fund investments before distribution then the capital gains arising out of it will be first taxed in your hands. While doing that you are eligible to get deduction for cost of acquisition originally incurred by your uncle and also get the previous holding period counted while deciding its nature.

Third, its necessary that documentation part is well managed in such transaction so that any possible queries from tax department either to you or your relatives receiving such assets can be suitable dealt with.

Fourth, the recipients are required to file a return of income only if there total income from all sources is more than minimum exemption limit applicable in their situation. 

Hope it answers your query. 

Given the multiple aspects of your query, limited clarity emanating from writeup and the need to properly plan and document every aspect of it, I would advise you to take a telephonic consultation. 

Best Regards, 

Hi,

1. Since you were merely a nominee and not beneficiary, amount received by you is not taxable in your hands. You may obtain the proof that you are merely a nominee and not beneficiary.

2. Assuming for mutual fund also, you are a nominee, same logic will apply.

3. Yes, it is very important to prepare a proper documentation for family settlement.

4. Ideally it should not be taxable as money received by way of inheritance is not taxable

5. It doesn't matter. Money received by anyone by way of inheritance is not taxable. 

6. Not mandatory but its recommenatory to file return to create proper trail of that money.

- Ideally there should be a registered will for distribution of assets on the death of the owner of the assets. If there is no will, before distribution of assets, prepare a family settlement agreement and get it registered to avoid any dispute after distribution of assets or in future. As you were a nominee, only you have the right to receive the money after uncle death. It is a case of inheritance of assets.

1. No it is not taxable in your hands. For income tax purposes, you can ask for a nominee letter from the bank on their letterhead properly signed and stamped. Retain bank statements of uncle to proove the transaction.

2. Mutual funds should be distributed in their original form to the beneficiaries as per the agreement before their actual sale by you. From A.Y. 2021-22, capital gain from sale of listed securities will be prefilled in your ITR. It seems that sale was done from your demat account and on your PAN. The amount of capital gain is not taxable in your hands as you were not owner of the assets. We have to explain to the authority about actual facts on the basis of the agreement. Retain all Demat statements of your uncle to proove the transactions. If it is a sale of equity mutual funds then long term capital gain upto Rs. 1 lacs is exempt from tax. After exemption of Rs. 1 lacs, it is taxable @10% without the benefit of indexation. Also we have to check whether mutual funds were acquired before 01.02.2018 for applicability of grandfathering clause.

3. Yes it is a very important document which should be properly documented keeping in view the future liabilities and dispute.

4. Distribution of bank proceeds is not taxable in their hands. In case of mutual fund income, I have to check the facts before I suggest something.

5. Yes he is a relative and money received by him from the proceeds of uncle death is not taxable.

6. It depends on actual figures.

You may further take a phone consultation to discuss above issues in detail.

1.The principal amount will not be taxable. Any income earned from the principal amount will be taxable in your hands.

2. Capital Gain will be taxable.

3. Yes, it is good to document.

4. No, the principal amount will not be taxable. Any income arising from investing that amount will be taxable.

6. Return filing is not required till income exceeds 2.5 lacs.

Dear Sir,

Hope you are doing well !!

1. Money received by you as nominee is not taxable.  You need to obtain proper proof for the same to avoid future litigations.

2.No, it is not taxable in your hands as you are acting as nominee only.

3.Yes, everything should be properly documented through family settlement deed.

4.No.

5.There is no income tax levied on inheritance. So it won't be taxable.

6.It is not mandatory but advisable to file the same.

No it won't be taxable as you are receiving it as just a nominee.

It would be better if they prepare a legal heir certificate and directly take the amount to avoid any confusion.

Thank you

Hi

1. No it is not taxable.but any income arise on same will be taxable.

2. No

3. Yes proper documentation is important .

4. No

5. She will be considered as relative. No amount will not be taxable.

6. No

Any amount received as nominee is not taxable & property received inheritance is not taxable at time of inheritance.

Please have a phone consultation for details discussion.