My son works in Europe. He transfers at least Rs1 lakh in my account every month. What will be the tax implication?
Section 56(2)(vii) of the Income-tax Act inter alia provides that any sum received (without consideration) from a relative is exempt from tax in the hands of the recipient. Also, a “son” qualifies as a relative under section 56. Accordingly, you will not be liable to tax on money remitted into your bank account by your son. But if this amount is invested elsewhere, any income from it will be taxable depending on the nature of the income so earned.
I have an agricultural land but it is agricultural only on papers. Though I don’t get any income from it and haven’t even rented it out, will there be any tax implication?
From an income-tax perspective, only a vacant/self-occupied house may be taxed on a deemed basis even if it is not let out, provided the assessee owns more than one property as self-occupied property. However, we understand that in your case you are holding a piece of land without any building appurtenant thereto and are also not deriving any income from such land. Since there is no income (deemed or otherwise) that you are earning from the land, no tax liability may arise.
However, there may be a wealth tax implication in case the land qualifies to be an “urban land” within the definition provided under the Wealth Tax Act. The definition is:
• Land situated in any area within the jurisdiction of the municipality or cantonment board and having a population exceeding 10,000 according to the last published census; or
• Land situated in any area within 8 km from the local limits of the municipality or cantonment board.
If the land owned by you satisfies any of the above criteria, it will qualify as urban land and you may be liable to pay wealth tax. At present, wealth tax is calculated at 1% of the net wealth in excess of Rs30 lakh. Please note that there is a specific exemption available under wealth tax for one house or part of house or plot of land belonging to an individual.
You may also be liable to pay property tax on the land. Levy of property tax is mandated by the laws governing the civil body of the area in which the property is located. However, an agricultural land may be exempted depending upon the law in the area.
Nitin Baijal, director, BMR Advisors
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