Tax Vimarsh is a Chennai-based tax advisory firm of Chartered Accountants, Advocates and domain specialists. We decode, respond to and resolve Income Tax, GST and statutory notices for individuals, NRIs and businesses across India.
INHERITING ASSETS?
PLAN AHEAD. PRESERVE YOUR LEGACY.
India levies no inheritance tax, but inherited assets carry tax consequences when they are sold, let out or remitted abroad. We make sure the records support the position.
Inheritance and estate tax advisory
Receiving an inheritance is not a taxable event in India. Estate duty was abolished in 1985, and property received under a will or by succession is outside section 56(2)(x). The tax arises afterwards. When an heir sells inherited property or shares, the capital gain is computed from the original owner's cost and date of acquisition, with the fair market value as on 1 April 2001 available for older assets.
The work is therefore about records and timing: establishing cost of acquisition, transferring the asset correctly into the names of the heirs, dealing with rental income in the meantime, and sequencing any sale so that the exemptions under sections 54, 54F and 54EC are available. Where an heir lives abroad, the deduction of tax under section 195 and the remittance documentation have to be dealt with as well.
Contact UsWhat this covers
- Cost of acquisition: original deeds, probate records, registered valuations, and the fair market value as on 1 April 2001 for assets acquired before that date.
- Transfer of title: succession certificate, legal heir certificate, mutation of property records, and transmission of shares, deposits and mutual fund units.
- Capital gains on sale, with the exemptions under sections 54, 54F and 54EC considered before the agreement is signed.
- Income in the meantime: rent received by several heirs, apportionment between co-owners, and deduction of tax on rent under section 194-I.
- Section 56(2)(x) where a transfer is not strictly an inheritance, such as a gift between relatives, a release or a family settlement.
- Non-resident heirs: deduction under section 195 on their share, certificates under section 197, remittance in Forms 15CA and 15CB, and treaty relief.
Who we advise
Heirs of ancestral property
Assets acquired before 2001, missing deeds, several co-owners and unregistered partitions.
Families planning ahead
Wills, nominations, HUF assets and settlements put in place before a succession rather than during a dispute.
Non-resident heirs
Deduction of tax under section 195, limits on repatriation, and relief under a treaty.
Common questions
Is there an inheritance or estate tax in India?
No. Estate duty was abolished in 1985 and there is no inheritance tax at present. Assets received under a will or by intestate succession are also outside section 56(2)(x). Tax arises on the income the asset produces and on the capital gain when it is sold.
How is capital gain computed on inherited property?
The previous owner's cost and holding period carry over to the heir. For assets acquired before 1 April 2001 the fair market value as on that date may be substituted, which normally calls for a registered valuer's report. Because the previous owner's holding period is included, an inherited asset is generally long-term from the outset.
What documents should a family keep?
The purchase deed or allotment letter, the will or succession certificate, the death certificate, mutation records, any registered valuation, and proof of improvement costs with dates. These are what establish cost of acquisition years later.
Are gifts between family members taxable?
A gift from a relative as defined in section 56(2)(x) is not taxable in the recipient's hands, and nor are gifts received on marriage or under a will. Gifts from others above fifty thousand rupees in a year are taxable. The clubbing provisions can still attribute income from a gifted asset back to the person who gave it.
What changes when an heir lives abroad?
Tax is deducted on the non-resident heir's share under section 195 on the consideration rather than on the gain, so a certificate under section 197 should be obtained before the transaction. Repatriation of the proceeds is subject to the limits set by the RBI and requires Forms 15CA and 15CB.
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Write to admin@taxvimarsh.com or call +91 63831 32629 with the notice, the return or the transaction you need help with.