Inheritance tax in India, 2026: there is none, and here is what applies instead

By Eldar Edmond Grady, CEO, PPLI.com. Research checked 20 October 2026.हिन्दी में पढ़ें

Indian law as at 20 October 2026, Financial Year 2026-27. If a future Finance Act introduces a tax on inheritance, this page will be updated the week the Bill is published; until then, the statements here are current.

PPLI.com is a research publisher. It is not a tax adviser or a law firm, it is not registered with IRDAI or SEBI, and it does not solicit or arrange insurance in India. Nothing on this page is advice on your own estate.

Is there an inheritance tax in India?

The rules that reach the heirs, later

Property received under a will or by inheritance is outside section 56(2)(x), so the heirs pay nothing on receipt. The cost of what they receive is the cost to the deceased, under section 49(1), and the holding period includes the deceased’s under section 2(42A). When the heirs sell, they pay capital gains tax on the whole gain from the original purchase: 12.5% long-term on listed equity above ₹1.25 lakh a year, 12.5% on other long-term assets without indexation since July 2024, and slab rate on short-term gains. A flat in Adyar bought in 1995 and sold by the children in 2030 is taxed on thirty-five years of appreciation in their hands. Transfer of immovable property to the heirs attracts stamp duty and registration charges at the rates of the state concerned, which several states reduce or waive for transfers within the family.

A gift during life is the other route, and it is tax-free in the recipient’s hands when it comes from a relative as defined in section 56(2)(x), spouse, siblings, lineal ascendants and descendants and their spouses among them. The cost and holding period carry over just as on inheritance. Gifts to a spouse or minor child bring clubbing under section 64, so the income from gifted assets is taxed as the giver’s.

What a life policy changes

Nothing on the inheritance side, because there is nothing to save. What it changes is the income-tax position of the money inside it: the sum received on death is exempt under the eighth proviso to ULIP) or Rs 5 lakh (other policies) of annual premium; death benefits stay exempt.">section 10(10D) whatever the premium, so the family receives the policy’s whole value without the tax that a surrender in life, or a sale by the heirs of a directly held portfolio, would have cost. The figures are on how India taxes a foreign life insurance policy, and the process of getting the money to the right person on estate planning in India with a life policy.

If a family member lives abroad, another country may tax the inheritance

The inheritance tax an Indian family actually meets is usually a foreign one. The United Kingdom taxes the worldwide estate of a long-term resident, now defined as ten of the previous twenty tax years in the UK, at 40% above the nil-rate band, with a tail of three to ten years after leaving; a son who has lived in London for twelve years is inside that net on his own estate, and gifts to him are a different question. The United States taxes the US-situs assets of a non-US person above an exemption of USD 60,000, and the worldwide estate of a US citizen or domiciliary above the 2026 exclusion, with a 40% top rate. Singapore has had no estate duty since 2008, and the UAE has none. A family with assets or members in those countries plans around the foreign rule, not the Indian one, and a policy owned in the right place is one of the tools: our UK edition and Singapore edition cover the rules there.

Sources and authorities

• Estate Duty Act 1953 and the Estate Duty (Amendment) Act 1985 (deaths on or after 16 March 1985). Gift Tax Act 1958, as repealed for gifts from 1 October 1998. Wealth Tax Act 1957, as repealed by the Finance Act 2015.
• Income-tax Act 1961: sections 2(42A), 10(10D) eighth proviso, 49(1), 56(2)(x), 64, 112 and 112A.
• United Kingdom: gov.uk: inheritance tax if you are a long-term UK resident. United States: IRS: estate and gift tax. Singapore: IRAS: estate duty.