For NRIs, inheriting property or other assets in India is more than just a financial matter—it’s often about preserving family legacies. However, navigating inheritance laws and tax implications for NRIs often involves a maze of legal requirements, tax implications, and compliance hurdles.
Understanding these complexities is crucial to ensure a smooth transition of assets and to make informed decisions. With this guide, we’ll help you decode inheritance laws and tax implications while ensuring you’re prepared for every step.
Inheritance Laws for NRIs: A Clear Overview
India’s inheritance laws vary based on religious affiliations and are also guided by secular laws like the Indian Succession Act. Here’s how these laws impact NRIs:
| Law | Applicability | Key Features |
| Hindu Succession Act, 1956 | Hindus, Jains, Sikhs, and Buddhists | Equal rights for sons and daughters in ancestral property. Self-acquired property is distributed as per the will or intestate rules. |
| Muslim Personal Law (Sharia) | Muslims | Legal heirs are divided into sharers (e.g., spouse, children), residuaries, and distant kindred. Wills can cover only one-third of the estate. |
| Indian Succession Act, 1925 | Christians, Parsis, and others not covered by personal laws | Distribution depends on whether the deceased left a will (testate) or not (intestate). |
Step-by-Step Guide to Inheriting Assets in India
Here’s a simplified process to help NRIs inherit assets smoothly:
- Check for a Valid Will
A registered will ensures a straightforward process, as the executor can distribute assets according to the deceased’s documented wishes. In the absence of a registered will, succession laws will apply. - Gather Required Documents
- Death Certificate
- Property Title Deed or Proof of Ownership
- Relinquishment Deed: A deed signed by all other legal heirs relinquishing their rights, accompanied by an NOC (No Objection Certificate) in the form of an affidavit from each heir.
- Consent to Sell: All legal heirs must provide consent to sell the property, with their presence required for signing. If travel or presence is an issue, they can issue a GPA/SPA (General or Special Power of Attorney) in favor of a first-blood relative to represent them.
- Obtain a Succession Certificate
If no will exists, you’ll need a succession certificate from the civil court to claim movable assets such as bank accounts or shares. - Transfer Ownership
- Update property ownership records.
- Contact financial institutions for asset transfer.
Tax Implications for NRIs on Inherited Assets
While India does not impose an inheritance tax, certain other taxes may apply depending on the asset type and its usage.
| Scenario | Tax Implication | Example |
| Receiving the inheritance | No tax liability when inheriting property or financial assets. | An NRI inherits a property valued at ₹1 crore—no immediate taxes are payable. |
| Rental income from inherited property | Taxable under “Income from House Property” at applicable slab rates. | If the NRI earns ₹10 lakh annually as rental income, it’s taxed after deductions like 30% standard deduction and property taxes paid. |
| Selling the inherited property | Capital Gains Tax: | – If sold within 24 months of inheritance, Short-Term Capital Gains (STCG) is taxed at slab rates.
– If sold after 24 months, Long-Term Capital Gains (LTCG) is taxed at 20% with indexation benefits. |
| Repatriating sale proceeds | Funds can be repatriated up to USD 1 million per financial year, subject to tax clearance. | Requires filing Form 15CA/15CB and clearance under FEMA regulations before repatriation. |
Leveraging Tax Exemptions
NRIs can minimise tax liabilities through exemptions like:
- Section 54:
- Exemption on capital gains if proceeds are reinvested in residential property within two years of the sale.
- Section 54EC:
- Exemption on capital gains if invested in government-approved bonds like REC or NHAI.
For a comprehensive guide on tax-saving strategies, refer to our blog: Tax Strategies for NRIs Selling Property in India.
Repatriation of Inherited Assets
NRIs can repatriate proceeds from inherited property under FEMA rules, but the process involves specific approvals:
- File Forms 15CA and 15CB for tax clearance.
- Repatriation is capped at USD 1 million per financial year per individual, with exceptions requiring prior approval from the RBI.
For detailed guidelines, refer to our blog: NRIs Remitting Property Sale Proceeds India.
Key Challenges for NRIs
- Legal Disputes: Ownership disputes among heirs can delay the inheritance process.
- Complex Tax Compliance: Understanding capital gains, exemptions, and repatriation rules can be overwhelming.
- Remote Management: Managing inherited property from abroad, whether for rental income or sale, can be challenging.
How Brivan Consultants Can Help
At Brivan Consultants, we specialise in simplifying inheritance matters for NRIs. Our team of experts ensures a seamless process by offering:
- Legal Assistance: Legal Assistance: We assist with obtaining death certificates, succession certificates, relinquishment deeds, will preparation, and GPA/SPA execution, ensuring all legal requirements are met.
- Tax Compliance: We guide you on capital gains tax, exemptions, and filing requirements, ensuring you stay compliant with Indian laws.
- Property Management: Property Management: We assist with selling inherited property, including documentation, sourcing and filtering potential buyers, and managing the complete resale process from start to finish.
- Repatriation Support: Our financial advisors help you navigate FEMA regulations and repatriate sale proceeds smoothly to your resident country.
With Brivan Consultants by your side, you can focus on preserving your family’s legacy while we handle the complexities.
Final Thoughts
Inheritance is about more than just assets—it’s about honouring your family’s legacy. Navigating inheritance laws and tax implications for NRIs can seem daunting, but with the right information and support, it becomes manageable.
If you’re navigating inheritance laws or tax implications in India, let Brivan Consultants simplify the journey. Contact us today for tailored solutions that meet your unique needs.
