When Does Capital Gains Tax Apply On An Inherited Property

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Tax On Inherited Property

Property received as a gift at the time of inheritance is not subject to tax but will attract capital gains tax during its sale.

Tax Exemption

Assets received as inheritance, either in cash or as physical property, are exempt from tax under section 56(2) (x) of the Income-tax Act.

Exempted From Tax


An inherited property will be subject to capital gains tax, calculated based on the asset’s holding period.

Tax Calculation

For tax calculation, the property’s holding period is considered from the date of its purchase and not the date of inheritance.

Indexation Benefit

In the case of LTCG, the seller will receive indexation benefits; taxpayers can declare the sale of the property in ITR 2 or ITR 3 forms.

Compiled By Himani Verma

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