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Inheritance Out-of-Court Settlement: Tax Implications?

T S Khurana

T S Khurana   |476 Answers  |Ask -

Tax Expert - Answered on Oct 30, 2024

A certified management accountant since 1993, T S Khurana is a fellow member of The Institute of Cost Accountants of India. His areas of expertise are income tax, specifically litigation cases, and GST.

Since the last 21 years, he has also been providing expert advice on financial matters, including investments and diversification of funds, and wealth building in the long term to his clients.
He believes that investment in real estate is the safest way for better returns and wealth generation over a period of time.

A former chairman of the Chandigarh Chapter of Institute of Cost Accountants of India, T S Khurana has also served as member of its technical committee.... more
Megha Question by Megha on Oct 21, 2024Hindi
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Dear Khuranaji, I am plaintiff in a court case over inheritance of properties owned by my deceased parent. The court case is about to go to trial stage. Other party(my close blood relation) is interested to do an out-of-court settlement. I would like to know what would be the tax implications on me upon accepting some X amount from the other party as part of the settlement so that it can help me arrive at a figure from my end. Currently I am not working but do have income from FDs etc. Thanks & regards, Anonymous

Ans: In this case it is a family settlement over inherited property.
Any amount, which you get out of family settlement will not be taxable under Income Tax. It is because, this is not your income but share of property of your parents.
It is advisable to avoid court cases, since it takes too long to settle & then the same can be challenged in higher courts.
Most welcome for any further clarifications. Thanks.
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Ramalingam

Ramalingam Kalirajan  |8500 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 11, 2024

Asked by Anonymous - May 01, 2024Hindi
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Hi Would like to get some ideas on the following My wife may get around 40 to 50 lakhs as part of her family settlement and the amount will be paid her mother to her directly Apparently my wife is working and she is a tax payer ! With this settlement money incurs any tax ? Also what is the ideal way to invest this bulk amount in any MFs ? Suggest please
Ans: Firstly, congratulations to your wife on the impending family settlement. It's an opportunity to secure your financial future. Let's address your concerns regarding taxes and investments.

As your wife is a taxpayer, it's crucial to understand the tax implications of the settlement amount. In India, money received from family settlements is generally not taxable under the Income Tax Act, provided it's received from a relative and doesn't fall under any taxable category like gifts or income. However, it's advisable to consult with a tax expert to ensure compliance with tax regulations.

Once the settlement amount is in hand, it's wise to consider various investment options to make the most of it. While direct investments in Mutual Funds (MFs) might seem appealing, it's essential to approach it strategically.

Regular funds through a Certified Financial Planner offer personalized advice tailored to your financial goals and risk tolerance. They can help you navigate the complexities of the market and make informed investment decisions.

Instead of putting the entire amount into MFs at once, consider a staggered approach through Systematic Investment Plans (SIPs). This spreads the investment over time, reducing the risk of market volatility.

Diversification is key to a robust investment portfolio. Allocate the settlement amount across different types of MFs, including equity, debt, and balanced funds, to manage risk effectively.

Avoid the temptation to time the market or chase high returns. Stay focused on your long-term financial goals and maintain discipline in your investment strategy.

Remember, every investor's situation is unique. Seek professional advice from a Certified Financial Planner to create a customized investment plan aligned with your financial objectives and risk appetite.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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Latest Questions
Nayagam P

Nayagam P P  |4986 Answers  |Ask -

Career Counsellor - Answered on May 24, 2025

Career
My daughter got 94.67 percentile in jee mains.her obs rank is 27873.we are from rajasthan.can she get nit.if yes than which nit and branch.
Ans: Hemlata Madam, Here is, How to Predict Your Chances of Admission into NIT or IIIT or GFTI After JEE Main/Advanced Results – A Step-by-Step Guide

Providing precise admission chances for each student can be challenging. Some reputed educational websites offer ‘College Predictor’ tools where you can check possible college options based on your percentile, category, and preferences. However, for a more accurate understanding, here’s a simple yet effective 9-step method using JoSAA’s past-year opening and closing ranks. This approach gives you a fair estimate (though not 100% exact) of your admission chances based on the previous year’s data.

Step-by-Step Guide to Check Your Admission Chances Using JoSAA Data
Step 1: Collect Your Key Details
Before starting, note down the following details:

Your JEE Main percentile
Your category (General-Open, SC, ST, OBC-NCL, EWS, PwD categories)
Preferred institute types (NIT, IIIT, GFTI)
Preferred locations (or if you're open to any location in India)
List of at least 3 preferred academic programs (branches) as backups (instead of relying on just one option)
Step 2: Access JoSAA’s Official Opening & Closing Ranks
Go to Google and type: JoSAA Opening & Closing Ranks 2024
Click on the first search result (official JoSAA website).
You will land directly on JoSAA’s portal, where you can enter your details to check past-year cutoffs.
Step 3: Select the Round Number
JoSAA conducts five rounds of counseling.
For a safer estimate, choose Round 4, as most admissions are settled by this round.
Step 4: Choose the Institute Type
Select NIT, IIIT, or GFTI, depending on your preference.
If you are open to all types of institutes, check them one by one instead of selecting all at once.
Step 5: Select the Institute Name (Based on Location)
It is recommended to check institutes one by one, based on your preferred locations.
Avoid selecting ‘ALL’ at once, as it may create confusion.
Step 6: Select Your Preferred Academic Program (Branch)
Enter the branches you are interested in, one at a time, in your preferred order.
Step 7: Submit and Analyze Results
After selecting the relevant details, click the ‘SUBMIT’ button.
The system will display Opening & Closing Ranks of the selected institute and branch for different categories.
Step 8: Note Down the Opening & Closing Ranks
Maintain a notebook or diary to record the Opening & Closing Ranks for each institute and branch you are interested in.
This will serve as a quick reference during JoSAA counseling.
Step 9: Adjust Your Expectations on a Safer Side
Since Opening & Closing Ranks fluctuate slightly each year, always adjust the numbers for safety.
Example Calculation:
If the Opening & Closing Ranks for NIT Delhi | Mechanical Engineering | OPEN Category show 8622 & 26186 (for Home State), consider adjusting them to 8300 & 23000 (on a safer side).
If the Female Category rank is 34334 & 36212, adjust it to 31000 & 33000.
Follow this approach for Other State candidates and different categories.
Pro Tip: Adjust your expected rank slightly lower than the previous year's cutoffs for realistic expectations during JoSAA counseling.

Can This Method Be Used for JEE April & JEE Advanced?
Yes! You can repeat the same steps after your April JEE Main results to refine your admission possibilities.
You can also follow a similar process for JEE Advanced cutoffs when applying for IITs.

Have some other options also as back-ups instead of relying only on JEE/JoSAA.

Want to Learn More About JoSAA Counseling?
If you want detailed insights on JoSAA counseling, engineering entrance exams, preparation strategies, and engineering career options, check out EduJob360’s 180+ YouTube videos on this topic!

Hope this guide helps! All the best for your admission and a bright future!

Follow RediffGURUS to Know more on 'Careers | Health | Money | Relationships'.

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Nayagam P

Nayagam P P  |4986 Answers  |Ask -

Career Counsellor - Answered on May 24, 2025

Asked by Anonymous - May 24, 2025
Career
Sir i have scored 95 percentile (75k) in jee mains and home state is rajasthan gen cat i was looking at bit mesra pec chandigarh for mechanical/civil and are these better options or should i go for north eastern nits and nits pondicherry nit raipur and tier 3 nits and i am confident enoungh i will be able to secure rvce cse in comedk which would be great option for me i have equal interest in core and tech branch and pls suggest good iiits to me
Ans: Prefer RVCE if you Score below AIR-500 through COMKEDK, if fee is affordable for you. With a 95 percentile and around 75,000 rank in JEE Mains, admission to top NITs or IIITs for CSE is unlikely, but you can secure seats in mid-tier NITs like NIT Silchar, NIT Meghalaya, NIT Pondicherry, and NIT Raipur for Mechanical or Civil branches. These NITs are improving rapidly in academics and placements and provide good core engineering education. Tier 3 NITs such as NIT Agartala and NIT Manipur are also accessible options. BIT Mesra and PEC Chandigarh are reputed private universities with strong programs and placements in core branches and are good alternatives if you prefer private institutes. For tech-oriented branches, newer IIITs like IIIT Bhopal, Bhubaneswar, and Vadodara offer CSE, IT, or ECE branches with decent placement records and accept ranks around your range. Since you have equal interest in core and tech, choosing Mechanical or Civil in NITs or BIT/PEC is advisable for core engineering, while IIITs or private universities can be considered for tech branches. Balancing branch preference with college reputation and placement prospects will help you make the best choice. All the best for your admission and a bright future!

Follow RediffGURUS to Know more on 'Careers | Health | Money | Relationships'.

...Read more

Nayagam P

Nayagam P P  |4986 Answers  |Ask -

Career Counsellor - Answered on May 24, 2025

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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