How Indian Assets Pass on Death: Succession and Inheritance for NRIs

Nothing is taxed on death — the difficulty is everything else

The Estate Duty Act 1953 stopped applying to property passing on the death of any person on or after 16 March 1985, and no successor charge has been introduced since. There is no Indian estate tax, no nil-rate band, no estate return and no clock running against your executors.

The receiving end is equally clean. The provision charging gratuitous receipts in the recipient's hands — section 92 of the Income-tax Act 2025, which took over from section 56(2)(x) of the 1961 Act for tax years beginning on or after 1 April 2026 — expressly excludes property received under a will, by way of inheritance, or in contemplation of death.

None of which makes an Indian estate easy. What makes it hard is proof: of which law applies, of who the heirs are, and of enough entitlement to persuade a bank or a registrar to move an asset into a name that sits abroad. That is where estates stall.

Which body of succession law applies to you

India does not have one succession law but several, and which governs your estate depends on your personal law and on the asset. Two conflict-of-laws rules sit above that. Under section 5 of the Indian Succession Act 1925, succession to immovable property in India is regulated by Indian law wherever the deceased was domiciled, while succession to movable property is regulated by the law of the country of domicile at death. So your flat in Pune is an Indian-law question even if you died domiciled in Dubai, while your mutual fund units may not be.

Section 4 of the same Act then disapplies that Part where the deceased was a Hindu, Muhammadan, Buddhist, Sikh or Jaina. For most Indian-origin families the codified domicile rule therefore falls away, and the position rests on personal law read with the conflict-of-laws principles the courts apply.

Within India, the substantive rules diverge:

Under the Hindu Succession Act, a male dying intestate has his property taken first by Class I heirs — son, daughter, widow, mother and specified descendants of predeceased children — who take simultaneously and to the exclusion of later classes. The 2005 amendment made a daughter a coparcener in joint family property by birth, on the same footing as a son.

Muslim succession restricts testamentary freedom. A bequest is generally effective only up to one third of the net estate, and a bequest to an heir generally needs the other heirs' consent, with Sunni and Shia schools differing. A will drafted abroad assuming full testamentary freedom can therefore fail in part over Indian assets.

Probate stopped being compulsory in December 2025

For decades, section 213 of the Indian Succession Act barred an executor or legatee from establishing any right under a will unless probate or letters of administration had been granted. It caught the wills described in section 57 — broadly, those of Hindus, Buddhists, Sikhs and Jains made in the former presidency towns of Calcutta, Madras and Bombay, and wills made elsewhere disposing of immovable property there.

Section 213 was omitted by the Repealing and Amending Act 2025, brought into force on 21 December 2025. There is now no statutory requirement to probate a will before asserting rights under it.

Treat that as the removal of a legal barrier, not an instruction to skip the courts. Institutions still set their own evidential standards, a sub-registrar must still be satisfied before mutating a property record, and a contested will must still be proved.

A succession certificate under sections 370 to 372 of the same Act remains available and is frequently what a bank actually asks for. It is narrower than people expect: it covers debts and securities only, not immovable property, and is granted by the District Judge where the deceased ordinarily resided or where property is found. It establishes who may collect, not who owns.

How each asset class actually moves

• Bank deposits. The bank pays the nominee, or the legal heirs on a death certificate, KYC documents and — above its own threshold — a succession certificate, will or indemnity. A non-resident heir receives their share into their own NRO account.
• Shares and demat holdings. The registrar or depository participant processes a transmission request against a death certificate and claimant KYC. The market regulator sets simplified documentation below stated value thresholds and fuller documentation above them; those thresholds are under active review, so confirm current limits with the registrar rather than an older circular.
• Mutual funds. The same pattern through the registrar and transfer agent, with units transmitted into a folio in the heir's own name and residency status.
• Immovable property. Nothing automatic happens. The property must be mutated in the municipal or revenue records, which needs the death certificate, proof of entitlement and, in an intestacy, usually a legal heirship certificate and no-objections from other heirs.

Each institution is protecting itself against paying the wrong person. Documents that satisfy one may not satisfy another, and heirs should expect to produce apostilled or consularised copies of anything issued outside India.

Nomination is a payment route, not a transfer of title

In Shakti Yezdani v Jayanand Jayant Salgaonkar, the Supreme Court confirmed that nomination under the Companies Act and the Depositories Act does not override the law of succession and does not create a third mode of succession. The nominee is simply the person the institution may safely deal with, holding what is received for whoever is entitled under the will or the applicable succession law.

Nomination is worth keeping current, because it is what unlocks an asset quickly. But naming one child as nominee is no substitute for saying, in a will, who is to have it — a gap families discover at the worst possible moment.

What FEMA lets a non-resident heir hold

Foreign exchange law is permissive on inheritance and far more restrictive on acquisition. Section 6(5) of FEMA allows a person resident outside India to hold, own, transfer or invest in Indian currency, security or immovable property where the asset was acquired, held or owned by them while resident in India, or was inherited from a person who was resident in India. Under the non-debt instruments rules, an NRI or OCI may also inherit immovable property from a non-resident who had themselves acquired it in accordance with the foreign exchange law in force at the time.

The agricultural carve-out follows the same logic. A non-resident cannot buy agricultural land, a farmhouse or plantation property, but there is no bar on inheriting them. The constraint appears on exit: such property can generally only be transferred to a person resident in India, which narrows the pool of buyers considerably.

Getting the proceeds out of India

Holding an asset and repatriating its value are separate questions, and the second is where a ceiling appears. Under the Foreign Exchange Management (Remittance of Assets) Regulations 2016, an NRI or person of Indian origin may remit up to USD 1,000,000 per financial year out of balances in an NRO account, out of sale proceeds of assets, or out of assets acquired by inheritance or legacy, on documentary evidence supporting the inheritance, an undertaking from the remitter and a chartered accountant's certificate. A foreign citizen not of Indian origin who inherited from a person resident in India has a comparable route on the same ceiling. Anything above that needs the Reserve Bank's specific approval.

The limit is per person per year, so an estate divided between four heirs has four allowances and a large sale can be phased across years. Every remittance is also conditional on Indian taxes having been dealt with: the remitter files an electronic declaration and, above a modest value, an accountant's certificate. Our guide to repatriation from India covers that machinery, and NRE, NRO and FCNR accounts explains which account the money must travel through.

The tax arrives when the asset is sold

Because nothing is charged on death, the tax question is deferred rather than removed, and it is usually larger than heirs expect.

When an inherited asset is later sold, the gain is computed by reference to the cost at which the previous owner acquired it, not the value at the date of death. That is the rule now in section 73 of the Income-tax Act 2025, on cost where an asset was acquired by succession, inheritance or will. The previous owner's holding period also counts, which normally makes the gain long-term. Where the asset was held on 1 April 2001, fair market value at that date may be substituted for actual cost, capped for land and buildings at the stamp duty value then.

So a flat bought by a parent in the 1980s can carry an embedded gain approaching the sale price. Two further points bite on a non-resident seller. The option to compute long-term gains on the older rate-with-indexation basis is confined to resident individuals and Hindu undivided families, so an NRI cannot use it. And the buyer must deduct tax at source at the rates applicable to a non-resident seller, on the consideration, unless a lower or nil deduction certificate has been obtained from the assessing officer first. Applying in advance rather than reclaiming afterwards saves months — our guide to NRI property and rental income sets out the mechanics.

Where cross-border estates go wrong

• One will, two jurisdictions. A single foreign will covering worldwide assets is often valid but slow over Indian property. A separate Indian will, drafted so the two do not revoke each other, usually moves faster.
• No schedule of assets. Heirs abroad routinely do not know which accounts, folios and plots exist. An unlisted asset is often an unclaimed one.
• Unmutated property. Where a previous generation's death was never reflected in the revenue records, the heir must unwind two successions, not one.
• Assuming the Indian answer settles it. Where you live may tax the estate, the heirs, or both. India charging nothing on death does not mean nothing is charged.

Compliance caveat

This guide describes the general framework governing succession to Indian assets: the absence of an estate tax, the division of succession law by personal law and asset type, the transmission process, and the FEMA position on inherited assets and their repatriation. It does not address disputed successions, Hindu undivided family property, trusts, foreign estate or inheritance taxes where you live, or business and unlisted holdings. Section numbers, thresholds and limits are stated in general terms, reflect the position at the date shown, and change at each Finance Act and by notification. This is a simplified educational guide, not tax, legal or investment advice. Global Investments is not authorised by the Financial Conduct Authority or by the Securities and Exchange Board of India. Confirm your position with a qualified Indian succession lawyer and tax adviser, and with an adviser where you live.

How Global Investments can help

Indian estates rarely fail on the law; they fail on documentation, sequencing and the gap between two countries' assumptions. Our advisers work with internationally mobile families to establish what is actually held in India, find where the will, the nominations and the title records contradict each other, and map the route each asset must take to reach the intended heir. We coordinate with Indian succession lawyers, chartered accountants and advisers where you live, so the Indian position, the repatriation position and your home tax position are considered together rather than in sequence — and where a return to India is in prospect, alongside your residence position under RNOR planning.