Any legal heir can file I-T return of the deceased

SC Vasudeva

I had bank FDRs jointly with my mother, she being the first named and I being the second named person in the FDRs. She expired last year. She used to file her income tax return regularly. We are two brothers and two sisters. Whose duty it would be to file her tax return? The FDRs were at higher interest rate than available at present, can I just keep the FDRs as such or do I have to necessarily encash them or bank can simply delete the deceased name and let it continue till maturity in my name? What are my tax-efficient options? 

— Jasdev Singh Gill

a) The income-tax return can be filed by either of the legal heirs as all the legal heirs are jointly responsible for payment of tax in respect of the income of the deceased for the previous year in which she had died. Income arising after her death will be includible in the income of each of the legal heirs and each one of you would be responsible for payment of tax in respect of his/her share of such income.

b) It may not be possible for you to keep the FDR in the name of the deceased. Her name will have to be deleted.  You may continue with the FD in your name, if the bank so permits. In such a case, it would be advisable to keep the FDR in your name till the time of maturity so as to earn the same rate of interest at which it was placed with the bank.

a) After retirement from Punjab, I migrated to Canada (NRI) and have inherited cultivated land. It is not clear whether it falls under municipal limit or not. Land is being given on lease, which is in my name for more than 15 years.

b) I am not showing any lease amount of land in my property returns being filed regularly an am showing only the pension etc.

c) Now I intend to sell my land and bring proceeds to Canada next year.

My queries are as under:

Will there be any income tax liability on the transaction. If yes, how much (%) in the following  cases:

• If that falls under municipal limit.
• If that is not under municipal limit.
• Do I need to show the transaction amount in the return, and how the proceeds can be remitted to Canada?
• — Er G. Sra

a) In case the agricultural land comes within the municipal limit, the amount of capital gain arising on the sale thereof will be taxable.  It has been clarified in the query that the agricultural land has been inherited by you and therefore it is presumed that it has been held for a period of more than three years.  Any gain arising hereon shall be chargeable to tax @20.6%.

b) In case the agricultural land is beyond 8 km of the municipal limits, measured aerially, capital gain arising thereon shall not be taxable in view of the fact that such agricultural land is not covered within the definition of the term ‘agricultural land’.

c) The amount of capital gain will have to be shown in the income-tax return in either of the case. In case it is exempt from tax, it will be reflected in the column wherein income exempt from tax is required to be shown. It is presumed that you are maintaining a non-resident ordinary account with a bank in India as the proceeds of the sale of the inherited agricultural land will be deposited in such account. You can remit $10,00,000 per financial year  out of NRO account in accordance with the regulations of the Reserve Bank of India.

Kindly clarify the following:

The money deposited under senior citizen scheme in Post Office is exempt from income-tax only for the 1st year. If this deposit on maturity is reinvested further for five years, will it qualify for exemption for first year of reinvestment from income tax.

— Mohinder Singh

a) The amount deposited under senior citizen scheme is not exempt from tax. However, a deduction to the extent of Rs 1,50,000 is allowed against the total income in respect of the amount so deposited.

b) The amount received on maturity will have to be in the first instance, deposited in your bank account and thereafter deposited again under the same scheme will enable you to claim deduction of Rs 1,50,000 in the year in which the deposit has been made.