How is inherited property to be declared in ITR?

Q – I’ve acquired two homes as a present from my grandmother however I forgot to say the reward within the ITR of 2017. What shall be the implications if I ever promote these homes?

– Name withheld

As per provisions of Section 56(2) of the Income Tax Act, 1961, (Act), in case an individual receives any immovable property with out consideration having the stamp obligation worth of greater than ₹50,000, then the identical shall be chargeable to earnings tax as earnings from different sources. However, in case such immovable property is acquired from a specified relative (grandparents are included underneath the definition of relative), then reward of such property isn’t taxable within the arms of the recipient.

In the moment case, we perceive that you’ve acquired two residential homes (located in India) as reward out of your grandmother in 2017. Since, for the aim of part 56(2) of the Act, your grandmother falls underneath the definition of specified family members, thus no taxability will come up in your arms and therefore no earnings (together with exempt earnings) was required to be provided to tax / reported within the tax return type, vis-a- vis the reward transaction.

However, contemplating that you simply acquired two homes, there can be implications with respect to reporting of taxable earnings from home property, relying upon the precise info of your case similar to variety of homes owned, whether or not self- occupied or let loose et, which can have to be individually evaluated. Please notice that there may very well be curiosity and penal penalties in case of mis/ under- reporting of such taxable earnings.

Further, the main points of the home properties are additionally required to be reported within the Schedule AL in case your whole taxable earnings exceeded ₹50 lakh for respective relevant monetary years.

At the time of sale of the homes, in case of a scrutiny, the Tax Authorities might ask for documentary proof, to substantiate the receipt of the property as reward from the outlined relative, value of acquisition, interval of holding, previous disclosures within the tax return kinds and so forth. Further, in relation to the interval of holding upon sale of belongings, it’s to be famous the interval for which the earlier proprietor (your grandmother) held these shares, will even be thought of to calculate the whole interval of holding for classifying the asset as short-term / long-term capital asset. Also, the price of acquisition of such homes in your arms would be the value for which your grandmother acquired it. Further, as per the provisions of the Act, in case the LTCA was acquired by your grandmother earlier than 1st April 2001, the price of acquisition shall be the precise value of the property or Fair Market Value (‘FMV’) as on 01.04.2001 (not exceeding stamp obligation worth of the property).

Parizad Sirwalla is companion and head, international mobility companies, tax, KPMG in India. If you have got any private finance queries, write to mintmoney@livemint.com to get them answered by specialists.

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