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IndiaTax & ComplianceUpdated: Sep 13, 2026
Direct Answer
For inherited property, the cost of acquisition is the cost to the original owner. The holding period includes the time the original owner held the property. If acquired before April 1, 2001, you can use the Fair Market Value as of that date for indexation.
Tax-Free Inheritance
Receiving a property via a will or inheritance is entirely tax-free. Tax is only triggered when you sell the property.
Calculating Long-Term Capital Gains (LTCG)
Because the property was inherited, your purchase cost is considered zero. However, the law allows you to adopt the purchase price of the previous owner.
- Indexation: You apply the Cost Inflation Index (CII) from the year the previous owner bought it (or 2001-02, whichever is later) to the year of sale.
- Holding Period: If your father bought it in 1990, and you inherited it in 2024 and sold it in 2025, it is a Long-Term Capital Asset because the combined holding period exceeds 24 months.