Income Tax on Inheritance

Hello Sir/Ma’am, good day!

Please tell me what are the tax implications if I give away my inheritance (received from my father) to my daughter’s children??

Thank you in advance!

Hello @Rakesh_Sharma

Inheritance will be considered as gift and gift received from relatives are not charged to tax.

So If you give away your inheritance (received from father) to daughter (a lineal descendant ) it will be exempt from tax but your daughter’s children are not lineal descendant so that will be taxable in their hands.

Hope this helps!

If I gift the shares to my husband worth more than 50,000 will he have to pay tax on receiving it ?.
Or he will pay tax after selling the shares ?

Hey @Subshiri, if the value of the shares is more than INR 50K, it would be taxable on receiving under IFOS, and if you sell them, they would be taxable under capital gains.

Dear Sir, is it taxable even if the same is received by relative?

Hi @The_Office_ADK, it is not taxable if it received by relative (relative defined under IT act)

My father recently passed away. He had three bank accounts. Two were joint accounts with my mother and one in his name. Apart from that he had a demat account and an ancestral property in his name. All these will be transferred in my mothers name. Please advise the tax liability if any on my mother.

Hey @Anup_K_Nair

Sorry to hear about you father.

Your mother will NOT be liable to pay any tax on the inherited assets, as she is the legal heir (assumed). The Income Tax Act, 1961 excludes inherited assets from taxation.

However, any subsequent income arising from these assets (dividend, interest, etc.) will be added to your mother’s income and she’ll be liable to pay tax on such income.

PS: I hope your father had added your mother as a nominee in his accounts, else you’ll have to do a lot of paperwork.

Hope this helps :grinning: & feel free to reach out for any further queries.

A post was merged into an existing topic: Agricultural Income Tax Liability

Hi. My father passed away in Nov 2019. We have received his PF+Insurance+Gratuity etc total amounts to 35L+ in my mother’s account. I have taken 25L+ from it as my share… Do I have to pay tax for these amount? I have got no salary from Apr 2020 because of Covid-19. There is no other income for me from then. Please elaborate as I am new to tax filing and its rules. I have never filed ITR till date as my salary was only 15k per month and I have no other income. Thank you for your response in advance.

Hey @sarvesh.k91

Income earned after the death of the individual will need to be disclosed in the personal income tax return of the legal heir. The legal heir should include this income inherited from the deceased in his own income while filing his own income tax return.

The liability of the legal heir shall be limited to the value of the assets inherited.

Feel free to reach out in case of further queries!

I received a property in inheritance, do I need to pay tax on it?

Hey Nidhi,

You don’t have to pay any tax on the transfer i.e. the inheritance of property. However, if you are receiving any income from it like rent or capital gains from the sale of house property - it will be taxable.

Hope this helps :slight_smile:

Hello all -

First, I deeply appreciate each of your collective time and helpful nature. I have received ancestral inheritance by bank deposit early this year. There was undivided ancestral land property from way long time ago (over 60 years). It was divided among the relatives this year, and registered to over 25 relatives (sons, daughters, widows, widowers, grand sons, daughters etc). On the same day, as soon as it was divided and registered, we all sold the property to a common buyer, who gave individual cheques to each of the relatives. I have received over 4L in this process, as some others have received over 10L also. The question is - how do I report this in the ITR this year? Should I report in exempt income (ES) schedule? I do not see inherited income in ANY of schedules - either Other Sources or Exempt Income schedule. Please let me know. Thanks much in advance!!

Hey @Bharti_Vasvani can you please help here?

Hello @raopreetham,

This is a capital transaction and hence shall be taxed under the head “Income from Capital Gains”. The amount that you have received (around INR 4 Lakhs) shall be the Sales consideration, you can claim the acquisition cost based on your share in the land, if acquisition cost is not ascertainable you can claim the fair value of that share of land as on 01/04/2001.

Hope this helps!

Thanks Bharti. But doesn’t this fall under the category of an inherited money and hence not to be taxed?

Hello @raopreetham,

When you inherited the ancestral property, it is not taxed at that time. As you have sold the property and earned some gain on transfer of capital asset, that gain will be taxable.

Hello,

I have gifted share to my wife. While I see it’s not taxable to me the equities were sold from my account and then transferred to wife account. How can I declare the value or adjust the gain to show this transaction?