Plan your wealth transfer smartly with expert inheritance and gift tax advisory.
India abolished inheritance tax back in 1985, so receiving an inheritance itself isn’t a taxable event, no matter the value. What does get taxed is any income the inherited asset generates afterward, rent on inherited property, dividends on inherited shares, and eventually the capital gain if you sell it. Gifts work under different rules entirely: under Section 56(2)(x), money or property received from a non-relative becomes taxable as income once the aggregate value crosses ₹50,000 in a year. Gifts from specifically defined relatives, spouse, siblings, siblings of your parents, lineal ascendants and descendants, and a few others, are exempt regardless of amount, as are gifts received on the occasion of marriage or through a will or inheritance.
When you eventually sell an inherited or gifted asset, your cost of acquisition isn’t zero and isn’t the asset’s value on the day you received it, it’s whatever the original owner paid for it. Section 49 carries that cost forward to you, and the holding period tacks on too, so if your grandfather held a property for fifteen years before it passed to you, that fifteen years counts toward your long-term capital gains eligibility from day one. Getting this documented properly at the time of transfer saves a lot of reconstruction work later, when the person who actually knows the original purchase details may no longer be around to ask.
None of the taxability rules change based on residency, but the mechanics around moving money do. An NRI repatriating inherited funds or gift money out of India works under the same NRO repatriation limit and CA certification process that applies to any other NRO remittance. Gifting immovable property requires a registered gift deed, which attracts stamp duty, though many states charge a reduced rate specifically for gifts between blood relatives. And if you’re an Indian resident who’s inherited assets located abroad, those need disclosure in Schedule FA of your return, separately from whatever income the asset itself generates.
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The gifts can be taxed depending on the amount, relationship and the tax laws that apply.
Whereas in most instances, it is not the inheritance that is taxed but the income that is attained through inheritance may be taxed.
The gifts that are offered by the named relatives are usually excused.
Yes, there are gifts which have to be disclosed according to the tax laws.