Income Tax: No tax payable on inheriting property

By: |
June 05, 2018 1:31 AM

Dividend received from a domestic company is exempt u/s 10(34) of the Income Tax Act, 1961.

income tax, inherited property, payable tax, dividendNo tax payable on inheriting property

No tax payable on inheriting property

* Does one have to pay tax on inheriting a property from a distant relative?
– Somesh Kumar

No, in India there is no tax on inherited property. If there is any income from such property, then it is taxable in the hands of inheritor and gains are also taxable in the hands of inheritor at the time of sale of such property. Whether the gain is long-term or short-term depends on the period for which it is held. The period for which such property is held by the previous owner is also taken into consideration while calculating the period of holding of such asset for calculation of capital gains.

* I am 63 years old and had submitted 15H to SBI in April 2017 not to deduct TDS on interest paid on senior citizen savings account. However, bank expressed its inability to receive 15H as bank’s software deducts TDS even after feeding 15H in its system, and deducted TDS in all four quarters. What should I do?

—N Krishna Murty

When 15H is submitted by a senior citizen to the bank in the beginning of a financial year, then for the relevant financial year no TDS shall be deducted on interest income paid by that bank to the senior citizen. In your case, 15H was submitted by you in April 2017 and thus, no TDS must have been deducted on your interest income against Senior Citizens Savings Act. Hence, you must approach your bank to comply with this.

* As a shareholder I have received dividend from a cooperative bank. Will the dividend be taxable in my hands?
—Manoj Kumar

Dividend received from a domestic company is exempt u/s 10(34) of the Income Tax Act, 1961. Since a cooperative society is owned by its customers and thus cannot be referred as a domestic company, and it is not required to pay dividend distribution tax, dividend received from a cooperative bank will be taxable in the hands of the shareholder under the head “income from other sources”.

* I am selling a flat with a capital gain of Rs 18 lakh. I plan to buy a new flat with it. Do I have to pay capital gains tax?
—KP Mani

Since you will invest full capital gains in the new flat, you will get deduction of the capital gain of `18 lakh as per Section 54 and not be liable to pay tax on it. You are required to purchase the flat within two years of the date of sale. If purchase is not done before the due date of filing of your income tax return, then you must deposit capital gain amount in the capital gain accounts scheme in order to get deduction.

The writer is partner, Ashok Maheshwary & Associates LLP. Send your queries to

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