“Synopsis”
Many NRIs eventually inherit property or money in India from family. But what happens next? Are there taxes to pay? Can you transfer inherited funds abroad? This blog covers the key legal and tax rules surrounding inheritance for NRIs in India—covering income tax, capital gains, and FEMA repatriation regulations—to help you stay compliant and make informed decisions in 2025.
Is Inheritance Taxable for NRIs in India?
India does not have inheritance tax as of 2025. That means:
-
If an NRI inherits property, cash, or investments from a parent or relative in India,
-
There is no tax at the time of inheritance.
However:
If you sell the inherited property or assets later, then capital gains tax will apply.
Types of Assets NRIs Can Inherit
-
Residential or commercial property
-
Land or agricultural land (restricted for purchase, but not for inheritance)
-
Cash or bank balances
-
Fixed deposits (FDs)
-
Shares or mutual funds
-
Gold or other movable assets
NRIs can legally inherit all of the above from relatives under Indian law.
Documents Required for NRI Inheritance
To claim or transfer inherited assets, NRIs usually need:
-
Valid Will or Succession Certificate
-
Legal heir certificate (if no will)
-
PAN card (India)
-
NRI bank account details (NRO/NRE)
-
Proof of relationship with the deceased
-
Death certificate of the relative
-
Title deeds for property or asset statements
It’s best to work with a lawyer to handle paperwork, especially for real estate.
Capital Gains Tax on Inherited Property
While inheritance itself is not taxable, selling the inherited property is.
-
Tax is charged only on capital gains, not the full value.
-
The cost of acquisition is considered the price paid by the original owner.
-
You can use indexation benefits if the property is held long-term.
Tax Rates:
-
20% for Long-Term Capital Gains (LTCG) (held for 2+ years)
-
30% for Short-Term Capital Gains (STCG) (held < 2 years)
You can also apply for a Lower TDS Certificate if you plan to sell.
Can NRIs Repatriate Inherited Assets Abroad?
Yes, under FEMA (Foreign Exchange Management Act) rules, NRIs can legally repatriate inherited assets like:
-
Sale proceeds from inherited property
-
Inherited cash or deposits
-
Maturity from inherited investments
Repatriation Conditions:
-
Limit of USD 1 million per financial year
-
Funds must be transferred from NRO account
-
Valid documents required (will, heir certificate, tax clearance)
-
Form 15CA & 15CB filing may be needed
-
No repatriation allowed from inherited agricultural land or farmhouses
How to Repatriate Inherited Property Sale Proceeds
-
Sell the inherited asset
-
Deposit the money in your NRO account
-
Pay capital gains tax, if applicable
-
Apply for CA certification (Form 15CB) and file Form 15CA
-
Submit documents to your bank (inheritance proof, tax paid proof)
-
Repatriate the money to your overseas account (within USD 1 million)
Banks handle these remittances under FEMA guidelines.
Important Compliance Tips for NRIs
-
Always use an NRO account to receive inherited funds
-
Report all inherited income in your Indian tax return if it earns interest or gains
-
Consult a tax advisor to avoid double taxation (via DTAA if applicable)
-
For inherited shares or mutual funds, update KYC as legal heir before selling
-
Maintain clean documentation for future audits or tax notices
Conclusion
Inheritance is a sensitive yet common financial event for NRIs with roots in India. While there’s no tax on receiving inheritance, it’s important to understand capital gains, FEMA, and repatriation rules if you plan to use or transfer these assets. With the right planning, legal support, and tax advice, NRIs can handle inherited wealth in a compliant, tax-efficient manner in 2025.
