A doctor wrote to Ask Wallet Wise about inheriting a bungalow worth Rs 50 lakh from his father. He already owns a house and wanted to know: Does he need to disclose the inherited property in his ITR, and will it attract any tax liability?
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I am a doctor having my own clinic. I have inherited a bungalow worth Rs 50 lakh in June 2024 from my father. I already have my own house. Please tell me whether it is necessary for me to disclose this inherited bungalow in my ITR? If yes, please tell me whether I have to pay any tax for it? Which ITR do I need to use?
Expert Advice: You are not required to pay any tax in respect of any asset received as inheritance at the time of receiving such inheritance. It is only when the inherited asset is sold that you may have to pay tax if any profits are made over the cost of such an asset.
As per the provisions of section 56(2(x) of the Income Tax Act, which treats gifts as income in the hands of the recipient if the aggregate of all the gifts received during the year exceeds Rs 50,000. This provision provides for certain exceptions in which case the receipt would not be treated as income.
Receipts of an inheritance, either under the personal law of the recipient or under a will, are one of the exceptions; thus, such receipts are not treated as income at all. Since the inheritance is not to be treated as income, the question of it being taxable or exempt does not arise. Therefore, you are not required to make any disclosure for the inheritance received in your ITR to be filed for the year 2024-2025 in which you received the inheritance.
The income tax laws require certain taxpayers to disclose certain assets and liabilities in case the taxable income for the financial year 2024-2025 exceeded Rs 1 crore. This limit was Rs 50 lakh till the financial year 2023-2024. So, in case your income exceeds Rs 1 crore, you have to disclose details of various immovable assets and movable assets in the Schedule AL of the ITR. Since you own more than one house property as on the last day of the year, you will have to use ITR 3 even if you are eligible to opt for the presumptive scheme of taxation available to doctors under Section 44ADA of the Income Tax Act.
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