Income tax liability on income arising out of transfer of money to nominee

[Dr. Ashok Dhamija]

This is a case of acquiring property by way of inheritance. It is covered under Section 56 of the Income Tax Act (Income from Other Sources). But, it is not taxed and it is exempted under Section 56 [under Proviso to clause (vii) of Section 56(2)] being a sum or money or property received under a will or by way of inheritance. It can be shown in the Income Tax Return under the relevant column where income exempt from tax is required to be reported.

However, please note that while receipt of such property by inheritance is not taxed, if such property is subsequently sold by such successor or nominee, the profit / gain on such sale may be taxable as per the provisions of the Income Tax Act.

     

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Dr. Ashok Dhamija is a New Delhi based Supreme Court Advocate and author of law books. Read more about him by clicking here. List of his Forum Replies. List of his other articles. List of his Quora Answers. List of his YouTube Videos.

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