Applicability of Clubbing Provision on amount received without Will
Query 1]
If I have capital gains (both, Short Term & Long Term) from the sale of mutual fund units. Do I have to use ITR 2 for filing IT returns for FY 2021-22? There’s no income from business or profession. Only pension, interest from bank deposits and this capital gain. Please guide me. [Prashant Pitkar – pvpitkar@gmail.com]
Opinion:
Any individual without any income from Business & Profession but has income by way of capital gain will be required to file the income Tax Return in ITR-2.
Query 2]
My wife has a separate bank account. Last year, my mother died on 5/5/2021) & Rs 11 lakh from the Post Office and FD of Rs 5.50 lakh were made in my wife’s name. Unfortunately, my father also died on August-21 and all the FD’s of around Rs. 40 Lakhs were encashed and transferred to my wife’s account (first in my account and then her account). In all, term Deposits of Rs. 50 lakhs were done last year in her account and TDS of 10% is deducted by the Bank. I want to know how to show this in her ITR? Her total income is below Rs. 5 Lakh from TD / FD/ saving Bank interest. Will TDS deducted can be refunded? I am a salaried person working in PSU as an executive. Kindly guide me. [S C Swami- scswami@gmail.com]
Opinion:
- Your wife has ultimately received Rs. 51 Lakh plus Rs. 5.50 Lakh on the death of her mother in law and father in law. It is not mentioned as to whether the amount is received by your wife as a result of will of the deceased or received without will. The tax treatment would depend as to whether the amount is received pursuant to will or not?
- If amount is received without Will of Mother in law / Father in Law:
Legally speaking, it appears that you were the legal heir of the amount and it has actually accrued in your hand which is transferred to the account of your wife. Since your wife has received the amount without consideration from you (directly or indirectly), the income of such amount would be taxable in your hands as a result of clubbing provision contained in section 64(1)(iv) of the Income Tax Act-1961. - If an amount is received as a result of the Will of Mother in law /Father in Law:
Since the amount is received by will, the clubbing provision will not be applicable. The income from such an amount will be taxable as her individual income and nothing would be required to be clubbed with your income. - How to show the amount in ITR:
a) There is no column or place as such to show the amount received by way of will or without will in the ITR. Only income from the investment can be shown in the ITR.
b) If the amount is received as a result of will, the amount of TDS done by the bank can be claimed as refund by filing income tax refund as her income is below Rs. 5 Lakh.
c) If the amount is received without will (i.e., given directly or indirectly by you to your wife), interest income will be taxable in your hands and you will be able to get the credit towards the amount of TDS done in her name
Query 3]
I am a practicing doctor, 69 years of age and an avid reader of your column The Tax Talk for many years. My last year’s income was Rs. 12 lakhs. I have professional income plus interest income. My ELSS + Mediclaim is of around Rs. 2 Lakhs & Professional expenditure about Rs. 1.50 lakhs. Which tax regime is better for me? Please elucidate. [Dr S Dutta, Bhilai – drsdutta1@gmail.com] Opinion:
- You may refer to the last issue of The Tax Talk Dated 06.06.2022 wherein the detailed discussion has been done with regard to old tax regime vs. New Tax Regime.
- In your specific case, your professional income is Rs. 10.50 Lakh and the same can be offered for taxation on presumptive basis u/s 44ADA.
- The difference of Tax Slab & Tax Rate in the Old Regime vs New Regime is as under:
| Income Slab | Tax Rate under Old Tax Regime | Tax Rate under New Tax Regime |
| Up to Rs. 2.50 Lakh | 0 | 0 |
| Rs. 2.50 Lakh to Rs. 5 Lakh | 5% | 5% |
| Rs. 5 Lakh to Rs. 7.50 Lakh | 20% | 10% |
| Rs. 7.50 Lakh to Rs. 10 Lakh | 20% | 15% |
| Rs. 10 Lakh to Rs. 12.50 Lakh | 30% | 20% |
| Rs. 12.50 Lakh to Rs. 15 Lakh | 30% | 25% |
| Above Rs. 15 Lakh | 30% | 30% |
- Which Tax Regime is better in your Case?
a) Under the old tax regime, you will be able to claim the deduction of Rs. 2 Lakh (presuming that your investment in ELSS is of Rs. 1.50 Lakh and Mediclaim payment is of Rs. 50,000/-]. As a result, your tax liability under the old regime would be Rs. 83,200/-
b) Under the new tax regime, you will not be able to claim the deduction of Rs. 2 Lakh towards investment in ELSS & Mediclaim payment. As a result, your tax liability under the new regime would be Rs. 88,400/-
With the above facts and figures, opting the old tax regime will be better for you.
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Applicability of Clubbing Provision on amount received without Will
