TaxTMI 
TaxTMI 
sir, client has taken a loan from parents and on demise of the parents , loan was treated as capital receipt . now notice received to treat the same as profit and chargeable under income from other sources! i need guidance on the issue, kindly clarrify
Loan taken from parents
11 Sep 2022 
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Taxability of loan forgiveness: whether parental loan discharge on death is capital receipt or taxable income.
Taxpayer treated a loan from parents as a capital receipt after the parents' death; tax authorities have issued a notice seeking to recharacterise the amount as income from other sources. Resolution hinges on the original nature of the transfer, documentary evidence of indebtedness and repayment terms, and the legal effect of the parents' demise on the outstanding loan; the taxpayer has been asked to provide the notice and loan facts to the adviser for further analysis. (AI Summary)
Taxpayer treated a loan from parents as a capital receipt after the parents' death; tax authorities have issued a notice seeking to recharacterise the amount as income from other sources. Resolution hinges on the original nature of the transfer, documentary evidence of indebtedness and repayment terms, and the legal effect of the parents' demise on the outstanding loan; the taxpayer has been asked to provide the notice and loan facts to the adviser for further analysis. (AI Summary)
