Section 56 (x) :- Following are liable to Income Tax :
- any sum received without a consideration exceeding Rs. 50,000/=.
any immovable property OR any property other than immovable property without a consideration or with inadequate consideration exceeding Rs. 50,000/=.
Exceptions
Provided that this clause shall not apply to any sum of money or any property received :
- From any relative (as defined).
- On the occasion of the marriage of an individual.
- Under a Will or by way of Inheritance.
- Under certain other cases under specified conditions
Can I receive any amount of asset under succession ?
Sec. 56 (x) does not lay down any limits (upper cap) on the value of the assets that can be received
THEN…
What is the maximum amount of assets that can be received under succession ?
Provision of Sec 68 of Income Tax Act needs to be considered :
- Where any sum is found credited in the books of an assessee maintained for any previous year and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not in opinion of the Assessing officer satisfactory the sum so credited may be charged to income tax as the income of the assesse of that pervious year.”
Rate of tax for incomes made taxable U/s. 68 has been prescribed U/s. 115 BBE.
The prescribed rate U/s. 115 BBE are :
60% + 25% Surcharge on basic tax + 4% Cess on total tax (including surcharge) = 78% (If disclosed in the Return of Income).
- 78% + 6% (10% of tax payable) [Penalty U/s. 271AAC] = 84%. (In case of detection during the Assessment Proceedings).
Can invite prosecution (Imprisonment & Fine) U/s. 276C(1), 277, 277A of the Income Tax Act.
How to comply with Section 68 of the Income Tax in assets received in succession ?
- Identity of the person from whom credit received.
- Credit worthiness.
- Genuineness of transaction.
Jewellery which can be considered as explained :
- CBDT Circular in context of search & seizure proceedings provides :
- Gold Jewellery & ornaments
- 500 gms – Married lady
- 250 gms – Unmarried lady
- 100 gms – per male member
- Declared in wealth tax return (when Wealth Tax Act was in force).
- Jewellery reflected in the Balance Sheet as an asset.
- The above can be considered as explained assets.
Transfer by Will or Gift ?
Is it better to receive a gift of property from a close relative in his / her life time or under a WILL ?
- Both are exempted from Income Tax by virtue of Sec 56 (x).
Is the WILL expected to be challenged ? This is the Deciding factor.
