NRI Inheritance in India: Property, Money, Tax and Repatriation

If you are an NRI inheriting property or money in India, there is no inheritance tax to pay in India, and FEMA lets you inherit any immovable property, including agricultural land, from a resident of India. You can move up to US$1 million per financial year of inherited money or sale proceeds abroad from your NRO account, with documents and Forms 145 and 146 (earlier 15CA and 15CB). Tax only starts when the inherited asset earns income or you sell it. Your country of residence may also want a form, such as the US Form 3520 for bequests over US$100,000.

Below is how each piece works: the FEMA rules, getting the money out, capital gains when you sell, shares and mutual funds, and the US side.

Is there inheritance tax in India for NRIs?

No. India does not levy an inheritance tax or estate duty today, and that applies whether the heir lives in India or abroad. The income-tax law goes further and says so directly. Section 92(2)(m) of the Income-tax Act, 2025 taxes money or property received without consideration above ₹50,000, but section 92(3)(c) switches that rule off for anything received "under a will or by way of inheritance".

So the inheritance itself is not income. What gets taxed is what happens afterwards:

• Rent from an inherited flat is taxable in India for an NRI.
• Interest on inherited money sitting in an NRO deposit is taxable, with TDS at 30% plus surcharge and cess unless a lower treaty rate applies.
• Capital gains arise when you sell the property, shares or fund units.

Can an NRI inherit property in India, including agricultural land?

Yes. RBI's Master Direction on acquisition or transfer of immovable property (No. 12/2015-16, updated 1 September 2022) allows an NRI or an OCI to acquire any immovable property in India by inheritance:

• from a person resident in India (para 3.1.4), or
• from a person resident outside India who had bought the property legally under the foreign exchange law in force at the time (para 3.1.3).

"Any" matters here. When an NRI buys property, agricultural land, plantation property and farmhouses are excluded (para 3.1.1). Inheritance has no such carve-out, so a farm your grandfather owned in Andhra or Punjab can pass to you while you live in Dallas or Dubai. State land laws can still add their own conditions on who may hold farmland, so check with the local revenue office before mutation.

You don't need RBI permission to inherit. The paperwork is Indian succession paperwork: the will and probate where required, or a legal heir or succession certificate, followed by mutation in the land or municipal records in your name.

Can you keep it, sell it or gift it on?

Para 3.2 of the same Direction lets an NRI or OCI transfer any property in India to a person resident in India. Agricultural land, plantations and farmhouses can only go to a resident. Other property can also go to another NRI or OCI; if that transfer is a gift, the recipient must be a relative as defined in section 2(77) of the Companies Act, 2013.

How do you send inherited money abroad?

Inherited money, and the sale proceeds of inherited assets, do not go into your NRE account directly. They land in an NRO account (credits of "legitimate dues in India" are allowed there under RBI's Deposits and Accounts Direction), and leave India under the Remittance of Assets route.

RBI's Master Direction No. 13/2015-16 (updated 29 June 2026), para 3.2, lets banks allow NRIs and PIOs to remit, on documentary evidence, up to US$1 million per financial year out of NRO balances, sale proceeds of assets, and assets acquired by inheritance or legacy. A June 2026 amendment added that this can include a transfer to your NRE account. If you send it in instalments, all of them must go through the same bank.

Above US$1 million in a financial year you need RBI's prior approval (para 4.1). The Direction also says the remittance is subject to Indian taxes being paid, and leaves tax compliance to the bank.

What documents does the bank ask for?

Expect your bank to ask for:

1. The death certificate and the will, probate, succession certificate or legal heir certificate that shows the asset is yours.
2. Proof of the source: the sale deed if you sold property, a capital gains statement for shares or funds, or the bank's transmission letter for deposits.
3. An undertaking that the NRO balance comes from your own legitimate receivables in India, not borrowings or transfers from another NRO account. RBI prescribes this wording in para 3.2.
4. Form 145 (earlier Form 15CA), filed online before the remittance. Under rule 220 of the Income-tax Rules, 2026, Part A covers taxable payments up to ₹5 lakh in the tax year, Part C covers larger taxable ones backed by a chartered accountant's certificate, and Part D covers sums that are not taxable.
5. Form 146 (earlier Form 15CB), the CA's certificate, when the taxable amount is above ₹5 lakh and you don't have an Assessing Officer's certificate.

Banks differ on what they demand for the inheritance principal itself, which is not income. Some may still want a CA certificate for a large NRO outflow. Ask your branch for its checklist before you book the transfer. The full mechanics are in my guide to repatriating money from India.

How is the sale of inherited property taxed?

When you sell, you step into the previous owner's shoes for both cost and time.

• Cost: section 73(1), Table Sl. No. 1 of the Income-tax Act, 2025 (old section 49(1)) says that for an asset received by will, succession or inheritance, the cost is what the previous owner paid, plus improvement costs borne by the previous owner or you.
• Holding period: section 2(101) counts the period the previous owner held the asset. Property becomes long-term after 24 months.

Here is what that means in rupees.

You held the flat yourself for only 17 months, but the gain is still long-term because your father's years count. The common mistake runs the other way: heirs assume their cost is the market value on the date of death. If that value were ₹1.2 crore, they would report a gain of ₹15 lakh. The law uses the original ₹22 lakh, so the real gain is about seven times larger. Keep your parents' purchase deed and receipts for improvements; without them you will struggle to prove any cost.

The gain is taxed at the long-term rate under section 197 (old 112), and the buyer must deduct TDS under section 393 (old 195) because you are a non-resident. Exemptions such as reinvesting in another house can reduce the tax. My guide to selling property in India as an NRI covers the rates, the TDS problem and the lower-deduction certificate, and the NRI property sale calculator runs the numbers for your own flat.

Can you repatriate the sale proceeds?

Yes, through the same US$1 million route. Para 8.1 of the property Direction says someone who inherited from a resident needs RBI permission to repatriate sale proceeds, but if they live outside India they can use the Remittance of Assets facility. That covers inherited agricultural land too, which is otherwise excluded from the separate repatriation route in para 8.2.

Heirs who sell an inherited flat but want to stay invested in Indian real estate without managing it from abroad often use listed REITs; see REITs in India 2026 for yields and tax.

What about inherited shares, mutual funds and bank deposits?

Shares and fund units move to you by transmission, not transfer. SEBI's master circular for registrars and listed companies (June 2025) lists what a nominee needs for single-name holdings: a signed transmission request, the death certificate and the nominee's self-attested PAN. Where there was no nomination, legal heirs add further documents such as an affidavit, or a succession certificate or probate where one exists.

Practical points for an NRI heir:

• Demat account: you need your own NRI demat account to receive shares. Ask the registrar and your broker which account, repatriable or non-repatriable, they will credit before you submit the request.
• Mutual funds: the AMC changes the folio into your name and records your NRI status. After that, redemptions are paid to your bank account and TDS applies as for any NRI.
• Bank deposits: a deposit in a parent's resident account goes to the nominee or heir; as an NRI you receive it in an NRO account.
• Sale proceeds: once sold, the money is "sale proceeds of assets" for the US$1 million route above.

The cost and holding-period rule from section 73 and section 2(101) applies to shares and fund units too, so you need the original purchase cost from the account statements.

Do you owe tax abroad on an inheritance from India?

That depends on where you live. For US persons, the IRS requires Form 3520 when you receive more than US$100,000 in a tax year in gifts or bequests from a nonresident alien or a foreign estate (irs.gov, reviewed 17 April 2026). The form is a report, not a tax bill, but the penalty for not filing is 5% of the bequest for each month it is late, up to 25%, unless you show reasonable cause.

Two more US points. Any income the inherited assets earn after you receive them, such as rent or interest, is part of your US income. And once you hold Indian bank or demat accounts, they count towards your FBAR and FATCA reporting; see my guide to FBAR and FATCA for Indian assets. If you sell Indian property, the US-India DTAA decides how the Indian tax is credited.

Other countries have their own rules, and they depend on your full situation there, including domicile and the size of the estate.

Much of the delay in these cases comes from the deceased having a nominee but no will, or the reverse. If you own assets in India yourself, put both in place: a nominee on every account and a will covering your Indian assets.

Checklist for an NRI heir

Common mistakes

• Using the date-of-death value as your cost. The law uses the previous owner's cost, as the example shows.
• Depositing inherited money into NRE. It must go through NRO, and only then to NRE within the US$1 million limit.
• Splitting remittances across banks. RBI wants all instalments through the same bank.
• Assuming you can't inherit farmland. You can. You just can't buy it, and you can sell it only to a resident.
• Forgetting Form 3520. The bequest isn't taxed, but a missed form can cost up to 25% of it.
• Leaving mutation for later. Without your name in the records, a sale or even collecting rent gets hard.

If you are also moving back, my moving back to India checklist covers what changes when you become resident again. More guides for NRIs are on the NRI hub.