Gifts and Inheritance in India: Tax Rules for Families

India has no inheritance tax or gift tax on the giver. But gifts can be taxed in the recipient's hands, income from gifted assets can be taxed back to the giver, and inherited assets carry tax when sold. This guide explains the rules.

Gifts From Relatives

Gifts from relatives are tax-free for the recipient, whatever the amount. Relatives include a spouse, siblings, siblings of the spouse, siblings of either parent, lineal ascendants and descendants, and the spouses of these people.

Gifts From Others

Gifts of money or property from non-relatives are taxable if their total value in the year exceeds ₹50,000. Gifts received on marriage, and under a will or inheritance, are exempt.

Clubbing

• Income from assets gifted to a spouse is taxed in the giver's hands.
• Income of minor children is generally clubbed with a parent's income, with a small exemption.
• Income from assets gifted to a daughter-in-law is clubbed with the giver.

Gifts to NRIs

Money or property gifted by a resident to a non-resident is treated as income arising in India, taxable for the NRI unless it's from a relative or otherwise exempt.

Inherited Assets

Inheritance isn't taxed when received. When the heir sells, the cost is the previous owner's cost, and the holding period includes the previous owner's holding. For assets acquired before 1 April 2001, the fair market value on that date can be used.

Stamp Duty

Gift deeds of immovable property attract stamp duty under state laws, often at concessional rates for close family. Wills don't attract stamp duty.

Getting Help

Think Filing advises families on gifts, inheritance and the tax on inherited assets.