You’re living in the US, UK, Australia, or the UAE. You get a call from India. A parent or relative has passed away. After the grief comes the paperwork — and that’s when you realise you have no idea how Indian inheritance actually works.
Who gets what? Does religion matter? Can you inherit agricultural land even though you can’t buy it? What documents do you need? How do you get the money out of India? And does anyone tax you on what you’ve just inherited?
This guide is written for the NRI who has just inherited — or is about to inherit — assets in India. Not for the person planning ahead (that’s our estate planning guide). This is for the person dealing with inheritance right now and needs clear answers.
The First Thing to Know: No Inheritance Tax in India
Let’s get this out of the way immediately, because it’s the first question most NRIs ask.
India does not levy inheritance tax. Estate duty was abolished in 1985 and has not been reintroduced. Under Section 56(2)(x) of the Income Tax Act, assets received through inheritance are explicitly exempt from income tax — whether you’re a resident or an NRI, whether the amount is ₹5 lakh or ₹5 crore.
However — and this matters — the moment you do something with those inherited assets, tax kicks in. Rental income from inherited property is taxable. Interest on inherited deposits is taxable. And when you sell inherited assets, capital gains tax applies. More on this below.
Which Succession Law Applies to You
This is where India differs from most Western countries. Indian succession law is not uniform. It is determined by the religion of the deceased person — not the heir’s religion, not the country of residence, not citizenship.
Hindus, Sikhs, Jains, and Buddhists fall under the Hindu Succession Act, 1956. If there’s no will, Class I heirs inherit equally. Class I heirs are: the spouse, sons, daughters, mother, sons and daughters of any predeceased son or daughter, and the widow of any predeceased son. If there are no Class I heirs, Class II heirs (father, siblings, and their children) inherit. The 2005 amendment gave daughters equal coparcenary rights in ancestral property — meaning a daughter has the same right as a son, including in Hindu Undivided Family (HUF) property.
Muslims follow Muslim Personal Law (Shariat). A Muslim can bequeath only one-third of their estate by will. The remaining two-thirds is distributed among legal heirs according to fixed shares prescribed by Shariat law. Shares are pre-determined — a wife gets one-eighth if there are children, one-quarter if there are none. Sons receive double the share of daughters. This distribution cannot be overridden even by a will.
Christians and Parsis are governed by the Indian Succession Act, 1925. If there’s no will: the spouse gets one-third, and children share the remaining two-thirds equally. If there are no children, the spouse gets half and the rest goes to other relatives (parents, siblings).
The critical implication: If the deceased left no will, you don’t get to decide how the assets are divided — Indian law decides, based on the deceased’s religion. This distribution may not match what you expected. The only way to direct assets differently is through a valid will, which is why our will guide for NRIs exists.
What NRIs Can Inherit — Including What You Can't Buy
Under FEMA, there’s a critical distinction between what NRIs can purchase and what NRIs can inherit. Inheritance is far broader.
You can inherit
Residential property, commercial property, agricultural land, plantation property, farmhouses, bank accounts, fixed deposits, mutual funds, shares, insurance policies, gold, and any other movable or immovable asset. There is no restriction. No RBI approval is required.
You can buy
Only residential and commercial property. Agricultural land, plantation property, and farmhouses cannot be purchased — but they can be inherited.
This means you might inherit agricultural land that you could never legally buy. Once you inherit it, you can hold it, use it for agricultural purposes, or sell it — but only to a person who is a resident Indian citizen. You cannot sell inherited agricultural land to another NRI or OCI. And you cannot convert it to commercial or residential use without state government approval, which varies by state.
How to Actually Claim Inherited Assets
The process depends on whether the deceased left a will or died intestate.
If there is a valid will
The executor named in the will applies for probate from an Indian court. Probate is mandatory in Mumbai, Chennai, and Kolkata, and is increasingly required by banks and registration authorities in other cities. Once probate is granted, the executor can transfer assets to the named beneficiaries. For bank accounts and mutual funds, the executor presents the probate order along with the death certificate, and institutions release the funds.
If there is no will
The process is significantly harder. You need one of two documents:
A legal heir certificate — issued by the local tehsildar or revenue authority. This establishes who the legal heirs are. It’s typically used for government claims (pension, provident fund) and is simpler to obtain (15–30 days in most states), but it’s not always accepted by banks for releasing funds.
A succession certificate — issued by an Indian district court under the Indian Succession Act. This is the document banks, AMCs, and financial institutions require to release movable assets (deposits, shares, mutual funds) to heirs. The process involves filing a petition, publishing a public notice in newspapers, waiting for objections (typically 45 days), and attending hearings. Timeline: 6–18 months. Cost: varies by state — court fees can be up to 3% of the estate value in states like Delhi, plus legal fees.
For immovable property (land, flats, houses)
You need to get the property mutated (title transferred) into your name at the local municipal or revenue office. This requires the death certificate, will or succession certificate, identity proof, and NOC from all co-heirs (if any). The process is separate from the financial asset claims and involves different offices.
If you can't be in India
You can execute a Power of Attorney for a trusted person in India to handle probate applications, bank formalities, and property mutation on your behalf. The PoA must be notarised and apostilled in your country of residence.
Tax When You Sell Inherited Assets
Inheritance itself is tax-free. But when you sell what you’ve inherited, the tax rules are specific — and different from what you’d pay on assets you purchased yourself.
Cost of acquisition
For inherited assets, the cost base is the price the previous owner (the deceased) originally paid — not the market value at the time you inherited it. If your father bought a flat for ₹10 lakh in 2005 and you inherited it in 2025, your cost base is ₹10 lakh. If you sell it for ₹80 lakh, your capital gain is calculated on the ₹70 lakh difference.
Holding period
This includes the previous owner’s holding period. If your father held the property for 20 years and you sell it a year after inheriting, it’s still long-term — you don’t start the clock fresh.
Tax rates for property
Long-term (held over 24 months including previous owner’s period): 12.5% without indexation. For properties acquired before July 23, 2024, you can choose between 12.5% without indexation or 20% with indexation — whichever is lower.
Tax rates for shares and mutual funds
Equity LTCG at 12.5% above ₹1.25 lakh annual exemption. STCG at 20%. Debt funds at slab rates.
TDS on property sale
If you sell inherited property as an NRI, the buyer must deduct TDS under Section 195 on the full sale consideration — not just the gain. This means significant upfront TDS that you claim back via ITR filing. A Lower Deduction Certificate (Form 13) can reduce this. Full details in our capital gains guide.
Getting Inherited Money Out of India
Once you’ve sold inherited assets or received financial proceeds, repatriation follows a defined process:
Sale proceeds go to your NRO account
If you don’t have one, you’ll need to open one — your NRE/NRO account guide explains the difference and process.
Repatriation limit
USD 1 million per financial year from NRO accounts. This covers all remittances — property sale proceeds, inherited deposits, rental income — combined.
Documentation required
Death certificate, probate order or succession certificate, CA certificate (Form 15CB, renamed Form 146 from April 2026) confirming tax compliance, and your declaration (Form 15CA, renamed Form 145 from April 2026).
Exception for NRE/FCNR-funded property
If the deceased had purchased the property using NRE or FCNR funds, and you inherit it, you can repatriate sale proceeds for up to two residential properties without the USD 1 million cap — up to the original foreign exchange amount invested.
Agricultural land proceeds
Sale proceeds from inherited agricultural land can be repatriated through the NRO route, within the USD 1 million annual limit, after paying applicable capital gains tax.f
Three Things to Do Right Now If You've Just Inherited
First
Gather documents — death certificate, the will (if it exists), property title deeds, bank statements, mutual fund statements, insurance policies. If you don’t know what assets exist, check with family members and the deceased’s financial advisor. Unclaimed asset searches through banks and IEPF can also surface forgotten holdings.
Second
Determine whether you need probate or a succession certificate. If there’s a valid will, engage a local lawyer to initiate probate. If there’s no will, apply for a succession certificate through the district court. If you can’t travel to India, execute a PoA for someone you trust.
Third
Don’t rush to sell. Inherited assets have no tax on receipt. Take the time to understand what you’ve inherited, what it’s worth, and whether holding or selling serves your long-term goals better. Inherited mutual funds may already be well-performing. Inherited property might appreciate. Get advice before making irreversible decisions.
Our team helps NRIs across the US, UK, UAE, Canada, Australia, and Singapore navigate the inheritance process — from understanding your rights and tax obligations to structuring the inherited wealth alongside your existing portfolio.
Frequently Asked Questions
Disclaimer: This blog is for informational purposes only and does not constitute legal, financial, or tax advice. Inheritance and succession laws vary by religion, jurisdiction, and individual circumstances. Tax rules and FEMA regulations are subject to change. Please consult a qualified legal professional for succession matters and a financial advisor for decisions regarding inherited assets. We specialise in Indian financial planning; for legal and tax implications in your country of residence, please consult local professionals.
