An inheritance of Rs 45 lakh can provide a significant financial cushion, helping recipients repay existing debts, meet major expenses or invest for long-term wealth creation.
For someone aged 45, this money could build a retirement corpus while their existing salary or income sustains their lifestyle. However, it is important to understand the tax implications, assess your needs, and avoid impulsive decisions. If someone aged 45 did receive Rs 45 lakh inheritance money, here’s what would happen next:
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Tax implications:Â
In India, money inherited from a father is not taxable as income in the recipient’s hands. However, if you invest that money and the asset generates gains, those gains may be taxable.
The key point is that although India does not levy a direct inheritance tax, the deceased person’s legal representative may still need to file an income tax return on their behalf for the financial year in which they died.
For example:Â
If you use the inheritance money to buy a property and then sell it, any gains from the transaction become taxable. On sale, long-term gains on land or buildings are typically taxed at 12.5% without indexation. For property acquired before July 23, 2024, resident individuals can choose 20% with indexation instead.
Similarly, taxation on gains from mutual funds, gold or fixed deposits follows the holding period and income tax slab norms.
How To Use Inheritance Money:
Assuming you already have some savings at the age of 45, you can use this money as a retirement corpus. At 12% returns till age 60, Rs 45 lakh may become:
- Investment amount: Rs 45,00,000
- Investment duration: 15 year
- Expected rate of return: 12%
- Estimated returns: Rs 2,01,31,045
- Total value: Rs 2,46,31,045
A corpus worth Rs 2.5 crore can certainly help you significantly during your retirement years. Alternatively, you can also use this money to build an emergency fund, buy gold, or look at other investment avenues.
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Since the sum is large, you may also set a goal first and then split the money for different purposes to ensure that it complements your retirement corpus and also helps in funding current lifestyle expenses.
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