How is inherited property to be declared in ITR?

I’ve acquired two homes as a present from my grandmother however I forgot to say the present 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 present of such property just isn’t taxable within the fingers of the recipient.

In the moment case, we perceive that you’ve acquired two residential homes (located in India) as present 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 kin, thus no taxability will come up in your fingers 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 present 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 is able to have to be individually evaluated. Please word that there might 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 present from the outlined relative, price of acquisition, interval of holding, previous disclosures within the tax return varieties and so forth. Further, in relation to the interval of holding upon sale of property, 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 entire interval of holding for classifying the asset as short-term / long-term capital asset. Also, the price of acquisition of such homes in your fingers would be the price 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 price 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, world mobility providers, tax, KPMG in India. If you may have any private finance queries, write to mintmoney@livemint.com to get them answered by consultants.

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