Moment guide · FY 2026-27
I am dealing with nomination, a will and inherited assets
Does nomination mean the nominee owns my assets after death?
Nomination gives custody, not ownership — a nominee is a trustee for the legal heirs, and a valid will (or succession law) decides who actually inherits. There is no inheritance tax in India, and the heir's cost for a later sale is the FMV on the date of inheritance under section 49(1), with the holding period running from the deceased's acquisition. Income from inherited assets is taxable in the heir's own hands.
Your legitimate options
Every route the statute actually gives you — with its condition, cap and deadline.
| Route | Condition | Cap / deadline |
|---|---|---|
| Nomination is custody, not ownership | A nominee holds the asset for the legal heirs; the will (or succession law) decides actual ownership | Nominee can be asked to transfer assets to the true heirs |
| Inheritance via will or intestate succession | A valid will overrides nomination for distribution; without a will, personal law applies | No inheritance tax in India |
| Cost basis for the heir | The heir's cost is the FMV at the date of inheritance u/s 49(1), and the holding period starts from the previous owner's acquisition | Income from inherited assets is taxable in the heir's hands |
The #1 trap
Believing the nominee becomes the owner — nomination only gives custody, and the true heirs can claim the assets. The second trap: selling inherited assets soon after inheritance and using the wrong cost; the cost is the FMV on the date of inheritance (section 49(1) explanation), not the deceased's original purchase price, and there is no inheritance tax in India.
The decision path
Follow it top to bottom — the first condition that matches is your answer.
Worked example
Sunita, legal heir to her father's estate in 2025
Sunita's father passes away in June 2025 leaving a flat, shares and fixed deposits. The flat was nominated to her, but she has two siblings, and the father's will distributes the flat equally among all three children. Nomination gave Sunita custody for the purpose of transfer, but under the will the flat belongs to all three heirs, and the bank and registrar will act on the will or succession certificate, not merely the nomination. There is no inheritance tax in India, so receiving the flat triggers no tax. The flat was bought by her father in 2008 for ₹25,00,000, and its fair market value on the date of inheritance in 2025 is ₹1,20,00,000. When Sunita and her siblings sell the flat in 2026 for ₹1,35,00,000, the cost of acquisition for each heir is their share of the FMV on the inheritance date under section 49(1), not the father's 2008 purchase price, and the holding period is taken from the father's 2008 acquisition, so the gain is long-term, taxed at 12.5% with no indexation. Sunita also inherits shares with a cost equal to the FMV on the inheritance date, and the dividends they pay are taxable in her hands at her slab rate, not in the estate's. Her father's fixed deposits continue earning interest, which is now her income. If the family wanted to avoid disputes, the will or a succession certificate would be the operative document, and the nomination letter alone would not be enough to transfer title. A quick call with us dials in the final figure. Sunita also checks the securities and bank accounts: the nomination on each demat account and deposit lets the nominee claim the asset quickly, but the distribution follows the will or the succession certificate, so she collects the family's signed consent before transferring the flat. The FMV on the date of inheritance is established with a registered valuer's report, because the assessing officer accepts a reasoned valuation when the property is sold later. If the heirs hold the flat as tenants in common with defined shares, each heir computes their own gain on their share using the same FMV and their own holding period. A quick call with us dials in the final figure.
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Sections: 49(1), 56(2)(x), 5, 2(31) · Last verified 2026-08-11 · Reviewed by Harun Raaj & Associates, Chartered Accountants. Every figure cites the Income-tax Act, 1961 (with ITA 2025 mapping via our section index).