Is money inherited after a parent’s passing taxable and how should it be reported in ITR?

Is inheritance money taxed?

Expert's advice: Section 56(2) of the Income Tax Act taxes gifts received during the year if the aggregate value of all gifts whether in cash or kind exceeds Rs 50,000. However, there are exceptions. Amounts received under a will or inherited under personal law are exempt. Since India does not have an inheritance tax, the money you received after your father’s death is treated as inheritance and is tax-free, without any limit.

Please note that you received the money as a trustee for other legal heirs. If your father passed away without a valid will, other legal heirs are entitled to claim their share from the amount transferred to you.

However, if your father bequeathed this amount to you under a valid will, you are not accountable to other heirs, and the entire amount belongs to you. If you are the only legal heir, you also become the full owner of the inherited assets.

Since inherited money is not treated as income, you are not required to disclose it in your ITR. However, if you prefer to be conservative, you may report it under Schedule EI (Exempt Income) in the ITR form.