My mother was having fixed deposits in a co-operative bank. After her death, as the nominee, I have closed the deposits and received around ₹2 lakh. This amount was shared equally by three of us, siblings. Is this amount taxable in my hands?

VVS Prabhakar

According to the Income Tax Act, 1961, any sum of money received by an individual from any person during a financial year (FY) without consideration, the aggregate value of which exceeds ₹50,000 is taxable under the head “income from other sources” in the hands of the recipient.

However, where the said money is received “under a will or by way of inheritance”, the same may be excluded from the income of the individual.

The income, however, earned from the amount invested out of funds inherited will be treated as the income of the transferee and taxed in his hands.

Since you and your siblings have inherited the maturity proceeds of fixed deposit amount from your mother, post her death, the same shall not be taxed in your hands. There is no requirement to disclose the receipt in your tax return as well. However, any income earned by you or your siblings from investing such funds shall be taxable in your respective hands.

I am a senior citizen receiving pension of ₹35,000 a month. I live in a rental house, paying a monthly rent of ₹7,000. Can I claim HRA deduction?

S Asokan

According to Section 80GG, where an assessee does not receive house rent allowance (HRA) from his employer and incurs expenditure on payment of rent, he may claim deduction of rent paid by filing the declaration in Form No 10BA.

Deduction available under Section 80GG of the Act is limited to lower of the following: Expenditure incurred on rent, less 10 per cent of total income; or 25 per cent of total income; or ₹2,000 per month (₹5,000 as proposed by the Finance Bill, 2016).

No deduction is available under Section 80GG if the rent incurred by the assessee pertains to the house (owned by him, his spouse or minor child or by an HUF, of which such assessee is a member) at a place where he ordinarily resides or performs duties of his office or carries on his business of profession; or the assessee owns a self-occupied house at any other place whose annual value is nil.

According to the provisions of law, a claim can be made for purposes of tax deduction at source from pension.

The Drawing and Disbursing Authority can allow the claim under Section 80GG after he satisfies himself that all the conditions mentioned above are being met. He would also require evidence of actual payment of rent before allowing such deduction.

Based on the facts provided by you, you may claim deduction of rent paid by filing the declaration in Form No 10BA (as prescribed in the circular 20/2015 dated December 2, 2015 for financial year 2015-16) and providing actual rent receipts.

The writer is a practising chartered accountant. Send your queries to taxtalk@thehindu.co.in

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