In India inheritance or estate duty doesnt apply

Written by Sandeep Shanbhag | AN Shanbhag | Updated: Aug 31 2009, 07:48am hrs
I had a query on Short Term Capital Loss and Long Term Capital Gain

1. I had purchased a flat in Dec 2005 and sold the flat in June 2009. In this transaction I made a Rs. 7 lakh gain which will be treated as Long Term Capital Gain.

2. Now can I offset the above gain with the Short Term Capital Loss which I had incurred in this financial year by sale of the shares, which I had sold on NSE, thus by paying STT.

3. I also had some Short Term Capital Gain which I had incurred by selling the shares on the stock exchange. So which one will be first offset

Can you please answer the queries and oblige.


Short-term loss can be off set against long-term gain or short-term gain whereas long-term loss can only be set-off against taxable long-term gain. Since you are free to set-off both long-term gain as well as short-term gain against the short-term loss, you should set off that amount of gain on which the tax payable would be higher thereby optimizing the set-off facility.

My late mother had nominated me for her fixed deposits in banks and post offices- total amount- about Rs. 4.5 lakh or so. In her will also made in 1996, she had also stated that after her demise, the money in bank and post office should be given to me - but this will was made way back in1996 and the fixed deposits were made mostly after the year 2000.perhaps some of the money for these fixed deposits were sent by me from my provident fund account. I retired in 2006 and got some retirement funds. As I was the nominee, the funds in my mother's account were transferred to my account. Whether this money which I received from my mother's account should be added to my total income for income tax calculations


The money received from your mothers account represents inheritance and since India doesnt apply inheritance or estate duty, the entire proceeds will be completely tax-free. However, it would be advisable to keep detailed records so that if the tax department asks for the it, you are able to show the trace and proof of the fact that the money was indeed received under your mothers will. Also note that any interest that you may earn out of this money will be fully taxable.

What is the procedure to close the file of a deceased person (salaried) who used to file Income Tax return Also, please let me know the status of filing return by a retired person whose gross income is below the taxable limit.

S.V. Eswaran

All that you have to do is to inform the ITO that the returns will not be filed in future giving the reasons for the same. If the income earned during the year till the death of the person exceeds the basic exemption limit, then a tax return has to be filed by the estate of the deceased.

Regarding your second query, note that if a persons income (before claiming deductions) is below the basic exemption limit, then tax return need not be filed. However, if such person desires to file a nil return, possibly to maintain continuity, then it has to be filed in the usual course by filling out the appropriate ITR form.

I started my PPF account in 1979 and got three extensions till March 2009. I do not want to extend it further. How long can I retain the deposited balance as on April 1, 2009 and get interest thereon without extending further.

Dr. Harjeet Singh

As per Sec. 9(3) of PPF scheme, at its maturity, the account can be continued for a block of five years. This facility is available for any number of blocks on expiry of each of the extended period. The continuation can be with or without contribution. Once an account is continued without contributions for one year, the subscriber cannot change over to with-contributions extension. [Notification F.3(6)-PD/86 dt 20.8.86].

Withdrawals, up to 100% of the amount to its credit. can be effected in installments, not exceeding one in a year. The balance, if any, will continue to earn interest till it is completely withdrawn..

I have a plot held for that is inherited by me from my father. He had purchased it in 1983. I have myself owned this plot now for 15 years. Is there any exemption for such money received Or it is treated as a long term capital gains


It will be treated as long-term capital gains. The cost of acquisition will be the cost paid by your father. However indexation will be taken from the date you started owning the plot. Tax on these gains can be saved by investing the capital gains in bonds u/s 54EC or by investing the net sale proceeds in another house property.

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