What is ancestral property? How is it divided?

A property in which you have a right since birth and which you inherit from your parents and other family members is known as ancestral property. This guide will explain the nitty-gritty of this legal concept alongside making you aware of the latest court judgements on the subject.

What is ancestral property?

An ancestral property is an undivided property in which four generations of a single family have their share. Once divided among the stakeholders, an ancestral property would stop being an ancestral property and turn into a self-acquired property.

See also: Gift deed vs will: Which is a better option to transfer property

Different types of ancestral property

An ancestral property can be of the following types:

Property inherited from a paternal ancestor: Property inherited by a male Hindu from his father, grandfather or great grandfather is ancestral property. The children, grandchildren and the great-grandchildren of the person inheriting such property acquire an interest in it by birth.

Property inherited from a maternal grand-father: Daughters are eligible to get a share in their parents’ ancestral property. By virtue of that, a maternal grandchild has a share in the property.

Share allotted on partition: The share received by a coparcener on the partition of ancestral property is ancestral property.

Property obtained by gift or will from a paternal ancestor: Where a Hindu makes a gift of his self-acquired or separate property to his son or bequeaths it to him under a Will, such property may or may not be an ancestral property in the hands of the donee.

Accretions: Accumulations and accretions of income of ancestral property are ancestral property.

Distinction between ancestral and inherited property

Understanding the distinction between ancestral and inherited property is crucial in Indian succession laws, as it affects ownership rights and the property’s transferability.

Ancestral property

Ancestral property is defined as property that has remained undivided and within a family for four generations. Members acquire a right to this property by birth. For example, if a great-grandfather owned land that was passed down without division to his son, grandson, and great-grandson, all four generations would have a claim to this property from birth.

Inherited property

Inherited property refers to assets received through a will or by succession after the owner’s death. Unlike ancestral property, inherited property becomes the self-acquired property of the recipient. For instance, if a father bequeaths his self-acquired house to his son via a will, the son inherits it as his self-acquired property.

Transition from ancestral to self-acquired property

Ancestral property can transition into self-acquired property upon partition. When the property is divided among family members, each person’s share becomes their self-acquired property, granting them absolute ownership. They can then manage, sell, or transfer it at their discretion. For example, if three brothers partition their ancestral land, each brother’s portion becomes his self-acquired property, which he can independently control.

Conversely, self-acquired property does not automatically become ancestral property. However, if the owner explicitly declares an intention to treat it as ancestral property, it may assume that status. For example, if a father declares his self-acquired property as ancestral, it can become part of the family’s ancestral assets, allowing his descendants to claim a birthright in it.

Blending of self-acquired property into ancestral property

A person can voluntarily convert their self-acquired property into ancestral property through a process called blending. This happens when the owner intends to treat the self-acquired asset as part of the joint family property—either by declaring it publicly or by allowing joint enjoyment (e.g., income from the property used for family expenses).

Once blended, the property loses its individual character and becomes part of the coparcenary. From that point, all coparceners, including daughters, gain a birthright in it. However, intention must be clear and unambiguous, and courts require strong evidence (like conduct, documents, or declarations) to accept such a claim.

Steps for individuals seeking to claim or partition ancestral property

Claiming or partitioning ancestral property in India involves a series of legal steps and the preparation of specific documentation. Here’s a comprehensive guide to assist individuals through this process.

Steps to claim or partition ancestral property

1. Establish your right
   Determine your status as a coparcener. Under the Hindu Succession Act, both sons and daughters have equal rights in ancestral property.
2. Gather necessary documentation
   Collect all relevant documents to substantiate your claim:
   • Title deeds and ownership documents of the property.
   • Records establishing your lineage, such as birth certificates and family genealogies.
   • Death certificates of deceased coparceners.
   • Any existing wills, gift deeds, or partition deeds related to the property.
3. Attempt an amicable settlement
   Engage in discussions with other coparceners to reach a mutual agreement on property division. If consensus is achieved, execute a partition deed detailing the distribution. This deed should be registered with the local sub-registrar’s office and may require payment of applicable stamp duty and registration fees.
4. Initiate legal proceedings if necessary
   If an amicable settlement isn’t possible, you can file a partition suit in the appropriate civil court. The process involves:
   • Drafting and filing a plaint outlining your claim and the relief sought.
   • Submitting all relevant documents as evidence.
   • Participating in court hearings where issues are framed, and evidence is examined.
   • Awaiting the court’s decree, which will determine the division of the property.

Dealing with disputes among heirs

Property disputes can be intricate and emotionally charged. Engaging a qualified legal professional can help navigate the complexities and work towards a resolution. Alternative Dispute Resolution (ADR) methods, such as mediation or arbitration, can also be effective in settling disputes without prolonged litigation.

Important considerations

• Legal advice: Consulting with a legal expert specializing in property law ensures that you are informed about your rights and the appropriate procedures.
• Documentation: Maintaining accurate and comprehensive records is crucial for substantiating your claim.
• Timeliness: Be aware of any statutory limitations that may apply to filing claims or suits related to ancestral property.

Which laws apply in division of ancestral property across religions in India?

Different laws are applicable depending on the religion of the person. In case of Hindus, Sikhs, Jains and Buddhists, provisions of the Hindu Succession Act are applicable. In case of Muslims provision of the Muslim personal law are applicable. In case of Christians and Parsis, the Indian Succession Act, 1865, is applicable.

How many generations can claim ancestral property?

In an undivided ancestral property, four generations of the male lineage have their claim. Basically, the father, the grandfather, the great grandfather and the great-great grandfather have inheritance rights over an undivided ancestral property. This means, say, on Ram’s ancestral property, his son Shyam, Shyam’s son Ghanshyam and Ghanshyam’s son Radhe Shyam have inheritance rights.

Also, whenever someone inherits a property from any of his paternal ancestors up to three generations above him, his legal heirs of up to three generations below him would get equal right, as coparceners in that property. So, when Radhe Shyam inherits a property from his father, three generations below him would have an inheritance claim on it.

See also: Benefits of self-acquired properties

Is there is a time limit for filing a legal claim?

In India, the right to claim ancestral property is subject to specific time limitations, and delays in asserting one’s share can have significant legal implications, including the potential for others to claim ownership through adverse possession.

Time limit for claiming ancestral property

Under the Limitation Act, 1963, individuals entitled to a share in ancestral property must file a suit for partition within a specified period. Article 110 of the Act prescribes a 12-year limitation period for suits by a person excluded from joint family property to enforce a right to share therein. This 12-year period begins when the individual becomes aware of their exclusion from the property.

Adverse possession and its impact

Adverse possession is a legal doctrine that allows a person to claim ownership of property if they have occupied it continuously, openly, and without the owner’s permission for a certain period. In India, this period is typically 12 years for private property. Suppose a rightful heir delays claiming their share of ancestral property, and another individual possesses the property under conditions that meet the criteria for adverse possession. In that case, the possessor may acquire legal ownership, thereby extinguishing the original owner’s rights.

State-specific limitations

While the Limitation Act provides a general framework, it’s important to note that certain states in India may have specific laws or provisions that impose different limitations on when claims to ancestral property must be made. These state-specific regulations can affect the time frame and conditions under which a legal claim can be filed. Therefore, it’s crucial to consult the local laws of the state where the property is situated to understand any additional limitations or requirements.

What is an undivided property?

If Ram decided to divide the property between Shyam and his other sons, the chain will be broken and the property inherited by Shyam will no longer qualify as an ancestral property but a self-acquired property. Simply stated, for a property to remain ancestral, no division should take place up to the four generations. An ancestral property that has been divided through a partition deed or a family arrangement, ceases to be an ancestral property as soon as the arrangement comes into effect. In other words, when a division or a partition takes place in a joint Hindu family, the property becomes self-acquired in the hands of the family member, who has received it.

Passing its judgment in the Uttam versus Saubhag Singh & Others case on March 2, 2016, the Supreme Court ruled that a joint family property ceases to be a joint family property in the hands of the various persons who have succeeded to it under Section 8 of the Hindu Succession Act, 1956, as they hold the property as tenants in common and not as joint tenants.

See also: Types of land ownership

Do gifted properties qualify as ancestral?

Properties that one acquires by way of a gift deed and through the execution of a will do not qualify as ancestral properties. Also note that through a gift deed, a father can give this self- acquired property to a third party in his lifetime. Through a will, the property ownership is transferred after the demise of the donor.

See also: Can gift deed be revoked

Exclusion from ancestral property

One is free to write a will and exclude one’s offspring (sons as well as daughters) from inheriting their self-acquired property. In 2016, the Delhi High Court ruled that an adult son had no legal claim on his parents’ self-acquired property.

Father can cut son off from his self-acquired property

“Where the house is a self-acquired house of the parents, a son, whether married or unmarried, has no legal right to live in that house and he can live in that house, only at the mercy of his parents up to the time the parents allow,” the HC order said.

See also: All about probate meaning 

Father can’t cut son off from ancestral property

The same, however, is not true for ancestral property. A father does not have a choice to exclude his son from possession of his ancestral properties. However, the Delhi HC, in November 2018, ruled that harassed parents can evict their children from any type of property. The type of the property, ruled by the HC, would in no manner act as a deterrent in eviction of children and legal heirs, who ill-treat their elderly parents.

After an amendment in the laws through the Delhi Maintenance and Welfare of Parents and Senior Citizens (Amendment) Rules, 2017, through which the term ‘self-acquired’ was done away with, seniors can apply for eviction of their sons, daughters and legal heirs from the property of any kind ─ movable or immovable, ancestral or self-acquired, tangible or intangible.

Start of right in an ancestral property

In case of ancestral properties, the right of the stakeholder arises at the time of his birth. In other forms of inheritance, such as inheritance through a will, the right arises at the time of the owner’s death. So, in the above stated example, Shyam’s right in his ancestral property will arise at the time of his birth and not at the time of his father Ram’s demise.

Share of each generation in ancestral property

The share of each generation is first determined and the share of successive generations is further subdivided from the share. Note here that the share of each member in his ancestral property is constantly decreasing as newer members keep adding into the family. That means, at some point, your share in the property might become quite insignificant and not worth pursuing.

Extent of claim over ancestral property

The previous generation will have a prior claim on an ancestral property. This means that the claim of the following generations will be a sub-division of what is left after the property is divided among the stakeholders of the prior generation. Simply stated, the rights of the stakeholders in an ancestral property are decided on a per-stripe basis and not on a per-capita basis.

If Ram has two brothers, their ancestral property will first be divided into three shares. The share of each brother can then be divided among their offspring and so on.

Ancestral property across multiple states

When ancestral property spans multiple states, it introduces legal complexity due to varying land and succession laws. While the Hindu Succession Act, 1956 provides the central framework for inheritance among Hindus, land—especially agricultural land—is a state subject. This means rules related to inheritance, especially for daughters or married women, can differ significantly across state borders, such as in Uttar Pradesh vs Maharashtra.

In cases where ancestral land exists in more than one state, claimants must determine the nature of each property (agricultural, residential, etc.) and understand the specific inheritance laws that apply in each state. Legal recognition of rights requires clear documentation—title deeds, family tree, death certificates—and in absence of uniform records, claimants may need to initiate separate partition or mutation processes in each state. Legal advice becomes essential in such cases to ensure rights are protected across jurisdictions.

For a smooth partition, legal heirs can opt for amicable settlements through family arrangements or pursue coordinated legal action across multiple jurisdictions. Where disputes arise, litigation or alternative dispute resolution mechanisms like arbitration may be used.

Can a will override birthright in ancestral property?

Each member of the family, including daughters, has a birthright to this property. Consequently, a person cannot unilaterally bequeath ancestral property through a will to third parties, as it would infringe upon the rights of other co-owners or heirs.

However, if a partition occurs, transforming the ancestral property into self-acquired property, the individual gains the freedom to distribute their share as they wish, including through a will. It’s important to note that the Hindu Succession (Amendment) Act, 2005, granted daughters equal rights as sons in ancestral property, reinforcing the principle of gender equality in inheritance matters. 

Therefore, while a will can dictate the distribution of self-acquired property, it cannot override the inherent birthrights associated with ancestral property unless a legitimate partition has occurred, converting it into self-acquired property.

Women’s right in ancestral property

Before an amendment was made in the Hindu Succession Act, 1956, women did not enjoy a right on their ancestral property after their marriage as they were not considered as coparceners. The old laws basically denied coparcenary status to women.

After the amendment in the succession law through the Hindu Succession (Amendment) Act, 2005, women have been accepted as coparceners. Now, both, sons and daughters, are coparceners in the family and share equal rights and liabilities over the property. A daughter remains a coparcener in the property even after her marriage. While it said that a daughter has the same rights over the ancestral property as the sons, the SC put a caveat that both, father and daughter, had to be alive on September 9, 2005, for this provision to come into force. In 2018, however, the SC ruled that a daughter can inherit her deceased father’s property, irrespective of whether the father was alive on this date or not. However, properties acquired from one’s maternal side do not qualify as ancestral properties.

See also: Property rights of daughter under Hindu Succession Amendment Act

Mother can claim share in her deceased son’s ancestral property: HC

The mother of a deceased son has a share in her son’s ancestral and joint family property under the Hindu Succession Act, the Karnataka High Court (HC) has ruled. As the Class-1 heir of her late son, the mother can demand her share even if her husband were alive, the high court has clarified.

While allowing an appeal by one T N Susheelamma, the HC said, “Since the deceased passed away leaving behind the mother, wife and son and they are the Class-I heirs of the deceased Hindu male member of the joint family, the original appellant (Susheelamma) is also entitled for a share in the property left by the deceased Santhosh as Class-I heir and the very approach of the first appellate court is erroneous.”

“No doubt, her husband is alive. But, as soon as her son passed away, she became the Class-I heir of the deceased son and the same was not considered by the trial court and erroneously proceeded that the mother cannot be considered as co-parcener and she cannot claim any independent share in the ancestral and joint family properties,” the high court observed.

Mother has no right to relinquish property rights of minor children: Telangana High Court 

A mother has no right to relinquish the rights of her minor children on their ancestral property without their knowledge and consent, the Telangana High Court has ruled. While giving its verdict in the Smt T Vijaya versus Sri Turkapalli Mallaiah case, the high court said that this legal position has been pronounced by orders of the Supreme Court.

Under Indian Succession Act, mother not legal heir of man who dies intestate: HC

Under the Indian Succession Act of 1925, the assets of a man who dies without leaving a will are divided between his widow and children, the Madras High Court (HC) has ruled. The mother of the deceased has no right in the properties of her late son, the high court clarified while giving its judgment in a recent case. The mother is entitled to get a share in her late son’s property only in the absence of his surviving wife and children, the two-judge bench of Justice R Subramanian and Justice N Senthilkumar ruled. “As per the rules under Section 33 and 33-A, where a Christian dies intestate leaving behind a widow and lineal descendants, 1/3rd of the property would go to the widow and remaining 2/3rd will go to the lineal descendants,” it said while delivering its verdict on an appeal filed by one Agnes alias Karpaga Devi and her minor daughter.

Women’s right in agricultural land

Even though the 2005 has made daughters an equal stakeholder in ancestral property, this rule often ignored at the time of division of agricultural land in India. This is primarily because land in India is a state subject while the Hindu Succession Act is primarily a central law. In many Indian states, agricultural land is divided according to state-specific laws that don’t treat daughter as equal beneficiaries of ancestral property.

See also: Can second wife claim property of first wife

Son-in-law’s right in property of his father-in-law

Since a son-in-law is not considered a part of the family of his father-in-law, he has no right in a property owned by the latter. According to a recent ruling by the Kerala High Court,  a son-in-law will have no right in a property belonging to his father-in-law, even if he has given money for the construction work of the said property.

“When the father-in-law is in possession of the property, the son-in-law cannot plead that he had been adopted as a member of the family, subsequent to the marriage with his daughter and has right in the property. Residence of the son-in-law is permissive in nature. (The) son-in-law cannot have any legal right to his father-in-law’s property and building, even if he has spent an amount on the construction of the building,” the HC said while giving its verdict in the Davis Raphel versus Hendry Thomas case.

Laws governing ancestral properties

While ancestral property is divided under the provisions of the Hindu Succession Act, 1956, among Hindus, Sikhs, Jains and Buddhists, the rules in this regard are governed by the Indian Succession Act, 1925, in case of Christians. In case of Muslims, provisions of the Muslim Personal Law (Shariat) Application Act, 1937, apply.

Among Christians, the inheritance and succession rules treat men and women equally. Also, their property is treated as self-acquired, in spite of its mode of acquisition and during one’s lifetime, nobody else can contest for it.

Under the Muslim law, there are two types of heirs – the sharers, who are entitled to a certain share in the deceased’s property and the residuary, who takes up the share in the property that is left over after the sharers have taken their share.

Inheritance laws for agricultural land in India

Inheritance laws for agricultural land in India are complex, with variations across states like Punjab, Haryana, and Maharashtra. These differences arise from the interplay between central legislation, such as the Hindu Succession Act, 1956 (HSA), and state-specific amendments or tenurial laws.

Hindu Succession Act, 1956 and its amendments

The HSA was enacted to codify and amend laws relating to intestate succession among Hindus, aiming to provide a uniform inheritance system. Initially, Section 4(2) of the HSA excluded agricultural land from its purview, allowing state laws to govern the succession of such land. This exclusion led to disparities, particularly affecting women’s inheritance rights. The Hindu Succession (Amendment) Act, of 2005, repealed Section 4(2), intending to bring agricultural land under the HSA’s ambit and ensure equal inheritance rights for women.

State-specific deviations

Despite the 2005 amendment, several states continue to enforce tenurial laws that diverge from the HSA, especially concerning agricultural land:

• Punjab and Haryana: Both states have tenurial laws prioritising male succession for agricultural land, often limiting women’s inheritance rights. These customary practices persist despite the HSA’s provisions, leading to legal ambiguities and challenges in enforcing equal rights.
• Maharashtra: Maharashtra has been more progressive in aligning with the HSA. The state implemented the Maharashtra Agricultural Lands (Ceiling on Holdings) Act, 1961, which, along with the HSA amendments, supports equal inheritance rights for women in agricultural land. This alignment has facilitated better enforcement of women’s property rights in the state.
• Uttar Pradesh and Uttarakhand: In Uttar Pradesh, the Uttar Pradesh Revenue Code, 2006, distinguishes between married and unmarried daughters regarding inheritance rights. Unmarried daughters are granted the same inheritance rights as sons, while married daughters receive weaker rights. This differentiation implies that daughters must choose between marriage and inheritance, contradicting the Hindu Succession Act (HSA), which does not discriminate based on marital status.
• Himachal Pradesh: Himachal Pradesh continues to apply tenurial laws that deny women equal rights to inherit agricultural land. Despite the 2005 amendments to the HSA aimed at eliminating gender discrimination, the state’s tenurial laws remain unchanged, perpetuating inequality in inheritance rights.
• Delhi (Union Territory): Delhi’s land reform laws have historically excluded women from inheriting agricultural land. Although the HSA was amended in 2005 to promote gender equality, these state-specific laws have not been updated accordingly, resulting in continued discrimination against women in matters of agricultural land inheritance.
• Northeastern States: Several northeastern states, including Assam, Meghalaya, Mizoram, and Tripura, operate under the Sixth Schedule of the Indian Constitution, allowing them to adopt local rules by their customary practices. These customary laws often discriminate against women, limiting their inheritance rights concerning agricultural land.

Inheritance laws for agricultural land in India

Inheritance laws for agricultural land in India are complex, with variations across states like Punjab, Haryana, and Maharashtra. These differences arise from the interplay between central legislation, such as the Hindu Succession Act, 1956 (HSA), and state-specific amendments or tenurial laws.

Hindu Succession Act, 1956 and its amendments

The HSA was enacted to codify and amend laws relating to intestate succession among Hindus, aiming to provide a uniform inheritance system. Initially, Section 4(2) of the HSA excluded agricultural land from its purview, allowing state laws to govern the succession of such land. This exclusion led to disparities, particularly affecting women’s inheritance rights. The Hindu Succession (Amendment) Act, of 2005, repealed Section 4(2), intending to bring agricultural land under the HSA’s ambit and ensure equal inheritance rights for women.

State-specific deviations

Despite the 2005 amendment, several states continue to enforce tenurial laws that diverge from the HSA, especially concerning agricultural land:

• Punjab and Haryana: Both states have tenurial laws prioritising male succession for agricultural land, often limiting women’s inheritance rights. These customary practices persist despite the HSA’s provisions, leading to legal ambiguities and challenges in enforcing equal rights.
• Maharashtra: Maharashtra has been more progressive in aligning with the HSA. The state implemented the Maharashtra Agricultural Lands (Ceiling on Holdings) Act, 1961, which, along with the HSA amendments, supports equal inheritance rights for women in agricultural land. This alignment has facilitated better enforcement of women’s property rights in the state.
• Uttar Pradesh and Uttarakhand: In Uttar Pradesh, the Uttar Pradesh Revenue Code, 2006, distinguishes between married and unmarried daughters regarding inheritance rights. Unmarried daughters are granted the same inheritance rights as sons, while married daughters receive weaker rights. This differentiation implies that daughters must choose between marriage and inheritance, contradicting the Hindu Succession Act (HSA), which does not discriminate based on marital status.
• Himachal Pradesh: Himachal Pradesh continues to apply tenurial laws that deny women equal rights to inherit agricultural land. Despite the 2005 amendments to the HSA aimed at eliminating gender discrimination, the state’s tenurial laws remain unchanged, perpetuating inequality in inheritance rights.
• Delhi (Union Territory): Delhi’s land reform laws have historically excluded women from inheriting agricultural land. Although the HSA was amended in 2005 to promote gender equality, these state-specific laws have not been updated accordingly, resulting in continued discrimination against women in matters of agricultural land inheritance.
• Northeastern States: Several northeastern states, including Assam, Meghalaya, Mizoram, and Tripura, operate under the Sixth Schedule of the Indian Constitution, allowing them to adopt local rules by their customary practices. These customary laws often discriminate against women, limiting their inheritance rights concerning agricultural land.

Who can sell an ancestral property?

In a Hindu Undivided Family (HUF), the Karta (head of the family) holds the authority to manage family assets. However, the sale of ancestral property typically requires the consent of all coparceners, including daughters, due to their equal rights established under the Hindu Succession (Amendment) Act, 2005.

An exception exists where the Karta can sell ancestral property without obtaining consent from other coparceners if there is a legal necessity or for the benefit of the estate. Legal necessity may include situations such as paying off family debts, performing essential family functions, or other pressing needs that justify the sale. The burden of proving such necessity lies with the Karta.

It’s important to note that any coparcener, including minors, who believe that the sale was not justified by legal necessity, can challenge the transaction in court. Therefore, while the Karta has certain discretionary powers, the rights of individual coparceners are protected under Hindu law.

See also: Who is a Karta in a Hindu Undivided Family?

Fraudulent sale of ancestral property by one member?

​In India, ancestral property is jointly owned by all legal heirs, and any sale requires the consent of each co-owner. If one member fraudulently sells such property without the agreement of all stakeholders, the affected parties have legal recourse. They can file a civil suit to challenge the sale’s validity and seek partition of the property to claim their rightful share. Additionally, criminal charges for cheating and forgery under sections like 420 of the Indian Penal Code can be pursued against the fraudulent seller.

To address the fraudulent sale, it’s advisable to gather all pertinent property documents and evidence of ownership. Consulting with a legal expert specializing in property disputes is crucial to navigate the complexities of the case effectively. Timely action is essential, as legal proceedings can be protracted, and prompt filing ensures better protection of one’s rights.

Benami claims in ancestral property: Are they valid?

In ancestral property disputes, one recurring issue is benami ownership—where a property is held in someone else’s name, but the actual payment and control lie with another person. This often happens within families, either to avoid taxes, for convenience, or to hide ownership. However, such arrangements are governed strictly by Indian law.

Under the Benami Transactions (Prohibition) Act, 1988, any property held benami—that is, in the name of someone other than the person who paid for it—can be seized by the government. The Act was further amended in 2016 to strengthen its provisions and enforcement.

In the context of ancestral property:

• If one family member claims that property was purchased in another’s name (say, in the name of a homemaker mother or minor child), they must prove who funded it and why it was not registered in their own name.

• Mere suspicion is not enough—clear documentary evidence, such as bank transactions, loan documents, and payment records, must establish the real owner.

• Courts also consider intention—whether the purchase was meant as a gift or trust, or part of a concealed arrangement.

Who can challenge benami ownership?

• Any coparcener or legal heir who believes a share of ancestral property has been wrongly registered can challenge it in civil court.

• If the benami transaction has led to a fraudulent sale or denial of rightful inheritance, the affected heir may file a suit for declaration and partition.

• The Initiating Officer under the Income Tax Department may also investigate benami transactions independently.

However, exceptions exist—for example, a property held by a Karta in the name of a family member for the benefit of the joint family may not be considered benami under law.

Capital gains tax on the sale of ancestral property

When you sell ancestral property in India, the profits earned are subject to capital gains tax. The tax treatment depends on the holding period of the property:

• Long-term capital gains (LTCG): If the property is held for more than 24 months, the gains are classified as long-term. LTCG is taxed at 20% with the benefit of indexation, which adjusts the property’s purchase price for inflation, thereby reducing the taxable gain.
• Short-term capital gains (STCG): If the property is held for 24 months or less, the gains are considered short-term and are taxed as per the individual’s applicable income tax slab rates.

Calculating capital gains

To compute the capital gains:

1. Determine the cost of acquisition: For inherited property, this is typically the original purchase price paid by the previous owner. If the property was acquired before April 1, 2001, taxpayers can consider the fair market value (FMV) as of that date.
2. Apply indexation (for LTCG): Adjust the cost of acquisition using the Cost Inflation Index (CII) to account for inflation. The formula is:
   Indexed Cost of Acquisition = Cost of Acquisition × (CII in the year of sale / CII in the year of acquisition)
3. Calculate the capital gains: Subtract the indexed cost of acquisition and any expenses related to the transfer from the sale proceeds:
   Capital Gains = Sale Consideration – Indexed Cost of Acquisition – Transfer Expenses

Tax exemptions under Sections 54 and 54F

The Income Tax Act provides avenues to save on capital gains tax through reinvestment:

Section 54: Applicable when LTCG arises from the sale of a residential property. To avail exemption:

• Purchase: Buy another residential property within one year before or two years after the sale.
• Construction: Construct a residential house within three years from the date of sale.
• Limitations: This exemption can be claimed for investment in up to two residential properties in India, provided the capital gains do not exceed ₹2 crores. This option is available once in a taxpayer’s lifetime.

Section 54F: Applies when LTCG arises from the sale of any long-term capital asset other than a residential house. To claim exemption:

• Investment: Invest the net sale consideration in purchasing one residential house within one year before or two years after the sale or construct one within three years.
• Conditions: The taxpayer should not own more than one residential house (other than the new asset) on the date of transfer and should not purchase or construct any residential house (other than the new asset) within two years or three years, respectively, after the date of transfer.

Capital Gains Account Scheme (CGAS)

If the capital gains are not immediately reinvested, they must be deposited in a CGAS account before the due date for filing the income tax return. This ensures the taxpayer remains eligible for the exemption. The deposited funds should be utilised for the specified investment within the stipulated time frames.

Recent updates

As of August 2024, taxpayers have the option to choose between:

• A 12.5% LTCG tax rate without the benefit of indexation.
• The existing 20% LTCG tax rate with indexation benefits.

This change aims to provide flexibility and relief to taxpayers, especially those selling older properties.

What is the right of a wife in her husband’s ancestral property?

Under the Hindu law, the wife of a man is entitled to get a share in her husband’s ancestral property in the capacity of his Class-I heir after his demise. Rules are not so straightforward, when it comes to the husband’s self-acquired property. In case he dies leaving a will and cutting his wife off of his self-acquired property, his wishes will take prevalence.

Children born in live-in relationships have right to ancestral property

According to a June 2022 order by the Supreme Court, children born out of a live-in-relationship can claim their right in their father’s ancestral property.

“It is well settled that if a man and a woman live together for long years as husband and wife, there would be a presumption in favour of wedlock. Such a presumption could be drawn under Section 114 of the Evidence Act…The law presumes in favour of marriage and against concubinage, when a man and a woman have cohabited continuously for a number of years,” the apex courts has ruled.

Do illegitimate children have right in ancestral property?

In Bharatha Matha & another versus R Vijaya Renganathan & others, and Jinia Keotin versus Kumar Sitaram cases, the apex court had ruled that children born out of a void marriage were not entitled to claim inheritance of the ancestral coparcenary property. They could claim their share only in their parents’ self-acquired property.

Daughters don’t lose right in parent’s property because they got dowry: HC

The right of daughters in their paternal property does not get extinguished because a dowry was given at the time of their wedding, the Goa Bench of the Bombay High Court has ruled. “Even if it is assumed that some dowry was provided to the daughters, that does not mean that the daughters cease to have any right in the family property. The rights of the daughters could not have been extinguished in the manner in which they have been attempted to be extinguished by the brothers, post the father’s demise,” the Bench said while giving its order in case where a brother has made a transfer deed without getting consent of his sister.

Family property received by Hindu woman through partition deed is not inheritance: HC

An ancestral property received by a Hindu woman through a registered partition deed cannot be termed inheritance under the Hindu Succession Act, the Karnataka High Court has ruled. Consequently, such a property will not go back to the heirs of the woman’s father upon her demise, the HC added.

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Father’s self-acquired property given to children by will/gift retains its status unless stated otherwise

According to the Supreme Court, in case a father leaves his self-acquired property to his children through a gift deed or through a will, the property retains its status as a self-acquired property and won’t turn into an ancestral property unless stated otherwise in the deed.

Right to property as a coparcener different from right of maintenance

Property given to a wife or daughter as maintenance is not the same as giving them a share in property, the Dharwad Bench of the Karnataka High Court has ruled. In an order dated April 5, 2023, the single judge-Bench of Justice Anant Ramanath Hegde also ruled that exception made to Section 6 (1) of the Hindu Succession Act, 1956, cannot apply if property partition is in violation of a court order.

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Adopted child stops being coparcener of birth family: HC

An adopted child stops being a coparcener of their birth family and consequently gives up any right or interest in the family ancestral property, the Telangana High has ruled. In an order dated June 27, 2023, the high court said that only if a partition took place before the adoption and the property was allotted to the adopted person, they could carry that property to their new family.

“Only if a partition has taken place before the adoption and property is allotted to his share or self acquired, obtained by will, inherited from his natural father or other ancestor or collateral which is not coparcenary property held along with other coparceners and property held by him as sole surviving coparcener, he carries that property with him to the adoptive family with corresponding obligations,” said the full Bench of the HC.

The Kalaburagi Bench of the Karnataka High Court has reiterated the same in a more recent order.

“This Court in the case of M Krishna versus M Ramachandra and Another has also reiterated the view that if the adoptee was the member of the joint family at the time of adoption, his rights in the joint family property extinguish unless, he possessed those properties by way of partition. It was observed that on adoption the adoptee gets transplanted in a family in which he is adopted with the same rights as that of a natural born son and as such, transfer of the adopted child severs all his right with the family from which he was taken in adoption. It was categorically held that, he loses right of succession in the genitive family properties,” the HC said in its order dated July 14, 2023.

Property bought in homemaker wife’s name is joint family asset: Allahabad HC

Property bought by a husband in the name of a housewife with no independent source of income will be categorized as the family’s joint property, the Allahabad High Court (HC) has ruled. Such property, prima facie, becomes the property of the joint Hindu family, the HC said in an order dated February 15, 2024.

“This court under Section 114 of the Indian Evidence Act may presume the existence of fact that the property purchased by a Hindu husband in the name of his spouse, who is a homemaker and does not have an independent source of income, will be the property of family, because in common course of natural event Hindu husband purchases a property in the name of his wife, who is homemaker and does not have any source of income for the benefit of family,” the court observed.

Housing.com POV

Navigating the complexities of ancestral property laws in India is as much about understanding one’s rights as it is about resolving disputes amicably. While recent amendments, such as the Hindu Succession Act, have paved the way for greater equality, state-specific deviations and customary practices continue to create disparities. The evolving landscape of legal interpretations and landmark judgments emphasizes the need for clarity and due diligence. Ultimately, ancestral property is not just an asset but a shared legacy, requiring balanced decision-making and mutual respect among all stakeholders.

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