NRI Taxation and Compliance (Part 7): Gifts, Inheritance, Wills and Succession in India
No inheritance tax in India, but NRIs face FEMA limits, proof of heirship and gift rules. Wills, probate, gift deeds and USD 1 million repatriation.
An NRI in London loses his father in Hyderabad. Flat, bank accounts, shares and an insurance policy are all in the father’s name. The family asks: is there inheritance tax, who is the legal heir, and can the money be sent abroad?
- Part 1: Residential status
- Part 2: Income taxation
- Part 3: Property
- Part 4: Banking and investments
- Part 5: Returning to India
- Part 6: Investing in Indian businesses
- Part 7: Gifts, inheritance and succession (you are here)
- Part 8: TDS, Section 195 and Forms 15CA/15CB
- Part 9: Return filing, refunds and notices
1. Tax position at a glance
| Event | Position (confirm for the year and section of the Income-tax Act, 2025) |
|---|---|
| Inheritance received | Not income in the hands of the heir |
| Gift from a “relative” (spouse, parents, siblings, lineal ascendants and descendants, and certain others) | Exempt, with no monetary cap |
| Gift from a non-relative above Rs 50,000 in a year | Taxable as income of the recipient; NRIs are covered too |
| Gift on marriage | Exempt |
| Later sale of inherited asset | Taxed on capital gain; cost and holding period of the previous owner are taken |
| Estate duty | Abolished in 1985 |
2. FEMA: gifts and inherited assets
| Case | Position (confirm) |
|---|---|
| NRI gifts immovable property to a resident relative | Allowed; agricultural land, plantation property and farm house can be gifted only to a resident Indian citizen |
| NRI gifts money to a resident relative | Allowed through banking channels; check source of funds and income-tax implications |
| Resident gifts to an NRI relative | Money can be credited to the NRO account; gift of shares or securities may need RBI approval or follow specific conditions |
| NRI inherits assets in India | Allowed; NRI or OCI can hold inherited assets |
| Remitting inherited money abroad | Up to USD 1 million per financial year, with will or legal heir documents, tax paid and Forms 15CA and 15CB |
| Inherited agricultural land | Can be held; sale only to a resident Indian citizen |
3. Wills
- Governing law: the Indian Succession Act, 1925 for wills of most communities, and personal laws where applicable.
- Registration: optional, but strongly advisable; it makes the will easy to prove.
- Probate: mandatory for Hindu wills only in the former Presidency towns (Mumbai, Chennai, Kolkata). In Hyderabad it is generally not compulsory, but some institutions ask for it or for a succession certificate (confirm current practice).
- Foreign will: a will made in the US, UK or Gulf may not cover Indian assets or may not be recognised easily. Make a separate Indian will for Indian assets, and coordinate the two.
- Witnesses: two witnesses, preferably not beneficiaries.
ComplianceKart plans the will, nominations, gift deeds, tax and FEMA remittance so the family is not caught in paperwork later. See our NRI estate and FEMA service.
4. If there is no will: proof of heirship
| Document | Use |
|---|---|
| Legal heir certificate (Revenue authority, Telangana) | Bank accounts, utilities, many government records (confirm local process) |
| Succession certificate (civil court) | Debts, bank balances and securities when institutions insist |
| Family settlement or release deed | Division of property among heirs, registered where immovable |
| Mutation in municipal and revenue records | Update after the transfer of title |
For shares, the demat nominee takes custody as trustee for heirs and needs the transmission process with the depository participant. Insurance and PF go to the nominee, but the nominee is not always the final beneficiary under succession law (confirm), so a will remains important.
5. Gift deeds for property
- A gift of immovable property must be by a registered deed (Transfer of Property Act, 1882, Section 123).
- Stamp duty and registration charges on family gifts are concessional in Telangana; confirm the current rate before registering.
- The donee takes the donor’s cost and holding period for future capital gains.
- Gift by an NRI from abroad needs a power of attorney or signing before an Indian consular officer or an apostilled deed (confirm).
6. Mistakes NRIs and families make
- No Indian will for Indian assets.
- Assuming nominee equals owner.
- Crossing the USD 1 million limit without documents.
- Unregistered gift deed for property.
- Forgetting that gifts from friends or non-relatives are taxable.
- Not updating nominations in bank, demat, insurance and locker records.
Why work with ComplianceKart
ComplianceKart is a boutique practice bringing Chartered Accountants, Company Secretaries and advocates under one roof. Think of a multi-speciality hospital: the physician, the radiologist and the pharmacist read from one patient file, so you never carry reports between buildings. Succession mixes law, tax and FEMA. A team of Chartered Accountants, Company Secretaries and advocates under one roof drafts the documents and handles the remittance.
Frequently Asked Questions
Is there inheritance tax in India?
No. Inheritance is not taxed in the heir’s hands. Tax arises on later sale.
Can an NRI inherit property in India?
Yes. Agricultural land can be held, but sold only to a resident Indian citizen.
Is a will needed to inherit?
No, but without a will you need proof of heirship, which takes longer.
Can I send inherited money abroad?
Yes, up to USD 1 million per financial year with documents and tax compliance.
Is probate mandatory in Hyderabad?
Generally not, but check the institution’s requirement.
Sources
- Indian Succession Act, 1925; Transfer of Property Act, 1882 (section 123); Registration Act, 1908
- FEMA (Non-debt Instruments) Rules, 2019 and Foreign Exchange Management (Remittance of Assets) Regulations (confirm current text)
- Income-tax Act, 2025 / 1961 provisions on gifts and capital gains (confirm section numbers)
Ready to act? Start with our NRI estate and FEMA service, check pricing, or contact us.
WhatsApp usEmail team@compliancekart.comCall 9959536391
Educational article, last updated 11 November 2026. General information, not advice on a specific case. Laws and due dates change; confirm on the date you act. Items marked (confirm) came from secondary sources and need checking against the official text.
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