NRI inheritance in India: property, assets and repatriation rules
India has no estate duty or inheritance tax. NRIs can inherit Indian property, bank balances, investments and movable assets from a resident or NRI. Capital gains arise only when the NRI sells inherited property. Repatriation of inherited funds from NRO is permitted within the USD 1 million annual limit subject to tax clearance.
No estate duty in India — NRIs inherit freely
India abolished estate duty in 1985. NRIs can inherit Indian property, bank accounts and investments without paying any inheritance tax. Capital gains arise only on subsequent sale of inherited property — the cost and holding period of the original owner are used for calculation. Inherited funds can be repatriated from NRO within the USD 1 million annual limit.
Key points
- No inheritance tax — India has no estate duty or inheritance tax — NRIs inherit Indian assets without any tax on the inheritance itself.
- Capital gains on sale — When inherited property is sold, capital gains are computed using the original owner's cost of acquisition and holding period.
- Repatriation via NRO — Inherited proceeds flow into NRO and can be repatriated within USD 1 million per year after tax compliance and Form 15CA/15CB.
Inheriting Indian property as an NRI
There is no estate duty or succession tax in India. An NRI inherits property through a will or under personal law (Hindu Succession Act, etc.) without any tax at the time of inheritance.
Cost basis: when the NRI later sells the inherited property, capital gains are computed based on the original owner's cost of acquisition (or fair market value as of April 1, 2001 if purchased before that date) and the original owner's holding period determines whether gains are short-term or long-term.
LTCG (property held 24+ months by the combined tenure) is taxed at 12.5% without indexation. The buyer must deduct TDS at 12.5% on the full sale consideration.
Sale proceeds flow to NRO. Repatriation requires paying all applicable taxes and filing Form 15CA/15CB.
Inheriting bank accounts and investments
Bank accounts: if the deceased account holder nominated the NRI, the bank transfers the balance. Without a nominee, the legal heir must produce a succession certificate or probate.
NRE/NRO accounts: on the account holder's death, balances are transferred to the nominee or legal heir. The NRI heir can credit the funds to their own NRO account.
Mutual funds and demat: nominee processes apply. Without a nominee, a transmission request with legal heir documents is submitted to the AMC or depository.
PF and insurance: nominee claims are processed by the employer or insurer — NRI nominees can receive and repatriate these proceeds subject to FEMA rules.
Frequently asked questions
Is there a time limit to claim inherited property in India?
The limitation period under the Limitation Act for claiming movable property is 3 years from the date of death. For immovable property, disputes can arise — promptly register your claim or mutation after inheritance.
Can an NRI repatriate inherited property sale proceeds in full?
Subject to the USD 1 million annual NRO repatriation limit and tax compliance. For very large amounts, RBI may allow repatriation in excess of the limit on application — consult a CA or RBI-registered lawyer.
Do I need to obtain probate for an inherited property?
Probate is mandatory in some states (Maharashtra, West Bengal, Tamil Nadu) for wills involving immovable property. In other states it is optional but recommended to avoid disputes. Consult a local property lawyer.