Exempt income

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

23 July 2013 Dear Sir,
There is an assessee whose father was a tailor and they did not file IT return in his whole life.
Now that assessee has received 4 lacs cash after the death of his father.

Please advise me, in which manner assessee should add this sum in his personal balance sheet without any tax liability.

Rupesh Jain

Rupesh Jain (Expert)
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23 July 2013 this amount received b assesse as legal heir from his father.

you can add in capital a/c no tax will applicable

Querist : Anonymous

Querist : Anonymous (Querist)

23 July 2013 In this regard I have following queries -

1. In which schedule of itr4 it will be shown.

2. how can assessee prove that it is sum received from his decesed father.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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21 July 2024 In the scenario you've described, where an assessee receives a sum of 4 lakhs cash after the death of his father and wants to add this amount to his personal balance sheet without incurring tax liability, here's how it typically needs to be handled:

### 1. Reporting in ITR-4

In the Income Tax Return (ITR), the amount received in cash should be reported in the relevant schedule that corresponds to "Exempt Income." In ITR-4 (which is typically used by individuals and HUFs having income from a business or profession), exempt income is generally reported under Schedule EI (Exempt Income). Here, the details of the exempt income received should be entered.

### 2. Proving the Source of Income

To prove that the 4 lakh rupees received is from the deceased father and not subject to tax:

- **Legal Heirship Certificate or Succession Certificate**: Obtain a legal heirship certificate or succession certificate from the appropriate authority. This certificate establishes the relationship between the assessee and the deceased father, confirming that the amount received is part of the inheritance.

- **Death Certificate**: Provide a copy of the father's death certificate, which establishes the fact of death and the timing of inheritance.

- **Family Settlement Deed or Will**: If there is a family settlement deed or a will that outlines the distribution of assets or specifies the amount received by the assessee, provide a copy of such document. This helps in substantiating the claim that the amount received is part of the inheritance and not a taxable income.

- **Bank Account Statements**: If the amount was received in cash, deposit it into a bank account and maintain records of the bank transaction. This creates a paper trail showing the source of the funds.

### Steps to Follow:

- **Document Gathering**: Gather all necessary documents such as legal heirship certificate, death certificate, and any other relevant documents proving the inheritance.

- **Filing ITR-4**: In ITR-4, under Schedule EI, report the 4 lakh rupees received as exempt income, providing details about the source (inheritance from deceased father) and attaching necessary supporting documents.

- **Consult a Tax Advisor**: If there are complexities or doubts regarding the tax implications or documentation, it's advisable to consult with a tax advisor or chartered accountant. They can provide personalized guidance based on the specific circumstances and ensure compliance with tax laws.

By following these steps and ensuring proper documentation, the assessee can add the inheritance amount to their personal balance sheet without incurring any tax liability, as it qualifies as exempt income under the Income Tax Act, 1961.

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