Inheritance and gift tax in India 2026

Key figures

India levies no inheritance or estate tax. Estate duty was abolished in 1985.
Property received under a will or by inheritance is exempt from income tax, without limit.
Gifts from relatives, as defined by the income tax law, are exempt whatever their amount, according to the Income Tax Department.
Gifts from non-relatives are taxable as income in the recipient's hands once they exceed 50 000 rupees in a financial year, and then on their whole amount, not only the excess.
The Income-tax Act, 2025 replaced the Income-tax Act, 1961 from 1 April 2026.

No inheritance tax, but a tax on some gifts

Estate duty was abolished in 1985 and the gift tax in 1998. Since then, what is taxed is not the transfer but the receipt: a gift from a person who is not a relative is treated as income of the recipient, at the recipient's own rate, once the total received in a financial year exceeds 50 000 rupees.

Three exemptions cover most families. Gifts from relatives within the legal definition, gifts received on one's own marriage, and anything received under a will or by inheritance are exempt, without any limit.

Who counts as a relative

The definition is statutory and narrower than family usage. It covers the spouse, brothers and sisters, the brothers and sisters of the spouse and of either parent, and lineal ascendants and descendants, with their spouses. A cousin, or a nephew or niece, is not a relative for this purpose, and a gift from one of them above the threshold is taxable.

Which law divides the estate

Succession law in India depends on religion. The Hindu Succession Act, 1956 governs Hindus, Buddhists, Jains and Sikhs; the Indian Succession Act, 1925 governs Christians, Parsis and others; Muslim personal law governs Muslims. A will is the way to depart from the default shares, within the limits each of these regimes allows.

What an heir should plan for

The inheritance is not taxed, but its later sale is. Capital gains on an inherited asset are computed on the cost and holding period of the previous owner, which can turn an old family property into a large taxable gain on sale.

For a non-resident heir, bringing the proceeds out of India is governed by the Reserve Bank of India's exchange control rules, which limit and document repatriation. The timetable deserves planning before the sale, not after it.

Questions

› Is there inheritance tax in India?

No. There is no inheritance or estate tax, and property received under a will or by inheritance is exempt from income tax.

› Is a gift from my parents taxable?

No. Parents are relatives within the legal definition, and gifts from relatives are exempt whatever their amount.

› Is a gift from my cousin taxable?

It can be. A cousin is not a relative for this purpose. Once the gifts received from non-relatives in the financial year exceed 50 000 rupees, the whole amount is taxable as income.

› Do I pay tax when I sell an inherited property?

Yes, on the capital gain, computed on the cost and holding period of the person you inherited from.

› Did the new Income-tax Act change the rules on gifts?

The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026. The substance of the gift rules is carried over; the section numbers change.

Sources

Income Tax Department guidance. Section numbers of the Income-tax Act, 2025 are not given here until read in the Act itself.

Income Tax Department