Money inherited from father is exempt, but interest is taxable

Any interest earned on the money placed in the bank account shall be taxable in your hands.

by Parizad Sirwalla


I have inherited Rs.75 lakh in cash from my father after his death. How will this amount be taxed? As of now I have put this amount in my savings account.
—Gupta
Under section 56 of the Income-tax Act, any money received by an individual from a person during any fiscal year (FY) without consideration, the aggregate value of which exceeds Rs.50,000, is taxable under the head “income from other sources”.
However, an exemption could be availed if the money is received from a relative, which includes among others, any lineal ascendant or descendant of the individual. Accordingly, the money received by you from your father shall not be taxable.
You may consult a lawyer for the documentation with respect to the transaction.
Any interest earned on the money placed in the bank account shall be taxable in your hands as per the income-tax slab rate in which you fall. You could claim a deduction for interest on bank savings up to Rs.10,000 from FY13.