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Tax, Mutual Fund Expert - Answered on Apr 19, 2023

Hardik Parikh is a chartered accountant with over 15 years of experience in taxation, accounting and finance.
He also holds an MBA degree from IIM-Indore.
Hardik, who began his career as an equity research analyst, founded his own advisory firm, Hardik Parikh Associates LLP, which provides a variety of financial services to clients.
He is committed to sharing his knowledge and helping others learn more about finance. He also speaks about valuation at different forums, such as study groups of the Western India Regional Council of Chartered Accountants.... more

Question by AMIT on Apr 12, 2023Hindi

Sir, My father deceased in December, 2022 and as a nominee I have received an amount of Rs.20 lakhs from his PPF account and Rs.7.90 lakhs from his FD in the bank. I want to transfer this amount to my Mother's account. She is retired Govt. officer and filing IT returns for her income every year. Sir, can I transfer whole amount of Rs.20 lakhs and Rs.7.90 through RTGS to my mother's account. I want to know that in future will there be any query/AIR from IT deptt. from me or from my mother relating to the transaction done by me. My father was Govt. retiree and Income Tax payee and had filed all IT returns upto FY 2021-22. Sir please guide in this regard so that there is no issue being raised by IT deptt for transfer of amount from my account to my Mother's account. I am also a Govt. Employee. Kindly give your valued advise.

Ans: Dear Amit,

You can absolutely transfer the entire amount of Rs. 20 lakhs from your father's PPF account and Rs. 7.90 lakhs from his FD to your mother's account through RTGS. Since your father was a regular Income Tax payer and had filed all his IT returns up to FY 2021-22, there should be no issues related to the legitimacy of the funds being transferred.

However, to ensure a hassle-free experience with the Income Tax Department in the future, I recommend taking the following steps:

Keep a record of the source of the funds, i.e., the PPF account and FD account details, as well as any supporting documents like your father's death certificate, nominee declaration, and bank statements.
When your mother files her Income Tax return for the relevant financial year, make sure to disclose these amounts as gifts received from you, her son, as gifts received from relatives are exempt from tax. You can provide the details of the source of funds and the reason for the transfer (i.e., inheritance) in the notes section of her return, if applicable.
If your mother earns any interest or income from these amounts, she should include that in her taxable income and pay the applicable taxes.
It would be helpful to consult a tax professional to ensure that all the necessary documentation and disclosures are made properly in both your and your mother's tax returns.
By following these steps, you should be able to avoid any queries or issues from the Income Tax Department regarding the transfer of funds from your account to your mother's account.

I hope this helps.

Take care.

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