Archive · 22 Aug 2025
Tax Filing Guidance for Inherited Assets and Advance Tax
If someone dies, the person in charge of their money also has to file their last tax return.
They are responsible for paying any taxes the deceased owed, but only using the money that was left.
When assets are passed down through a will, it doesn't trigger capital gains tax.
If you earn money from different sources, and the total tax due is over a certain amount, you have to pay taxes in advance to avoid penalties.
When selling a property that was inherited, the cost is either what the deceased paid for it or the fair market value from a specific date.
Legal representatives are responsible for filing the final income tax return for the deceased.
Liability is limited to the value of the deceased's estate.
Transfer of assets through a will isn't subject to capital gains tax.
Advance tax must be paid if total tax liability exceeds Rs 10,000 in a financial year.
Capital gains on inherited property are calculated using the father's acquisition cost or FMV on April 1, 2001.
- Who
- Legal representatives, taxpayers with multiple income sources.
- What
- Legal representatives must file the final income tax return for the deceased, and taxpayers must pay advance tax if liability exceeds Rs 10,000.
- When
- Advance tax should be paid as soon as a shortfall is estimated.
- Where
- N/A
- Why
- To fulfill tax obligations and avoid interest and penalties.
Taxpayers
Government
Tax Responsibilities
Taxpayers
Uncertainty regarding tax filing responsibilities post-inheritance.
Government
The government receives the due taxes.
Advance Tax
Taxpayers
The necessity of advance tax payments.
Government
The government receives due taxes promptly.
- Applicable Tax Law
- Income-tax Act, 1961
- Advance Tax Threshold
- Tax liability exceeding Rs 10,000
- Capital Gains Tax Rate
- 12.5% (without indexation)
