What is the taxability for inherited assets?

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—Name withheld on request In accordance with section 47 of the Income Tax Act , the transfer of capital assets through inheritance is not deemed as a taxable transfer. Therefore, the receipt of ₹20 lakh and two house properties through inheritance does not incur any tax liability at present. Any tax obligation would arise only upon the eventual sale of the house property in the future.

It’s important to note that there is currently no scope in the income tax return for declaring inherited property, and as such, no additional disclosure is required for these inherited assets. As per Section 56 of the Income Tax Act, any monetary gift, immovable property or moveable property received by an individual becomes taxable if the aggregate sum of money received during the year exceeds ₹50,000. However, there are specific exceptions to this rule, including gifts received from relatives.

For the purpose of the Income Tax Act, “relative" includes: (a) Spouse of the individual; (b) Brother or sister of the individual; (c) Brother or sister of the spouse of the individual; (d) Brother or sister of either of the parents of the individual; (e) Any lineal ascendant or descendant of the individual; (f) Any lineal ascendant or descendant of the spouse of the individual; (g) Spouse of the persons referred to in (b) to (f). Accordingly, transfer of cash and house property to your maternal aunt should also be non-taxable. However, repatriation limits for the gift will be subject to Foreign Exchange Management Act (FEMA) laws, allowing her to receive funds within the prescribed limits.