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Inheritance Laws for NRIs: Understanding Your Rights and Legal Process

by Ashiana / / 3728 views/ Reading Time: 4 minutes

Navigating inheritance laws in India can be complex and overwhelming for non-resident Indians (NRIs). Multiple factors such as property ownership, taxation, and legal formalities come into play, so understanding your rights and the legal process is crucial to avoid complications. This blog will provide a comprehensive guide for NRIs, covering key aspects, legal frameworks, and essential steps to handle inheritance in India smoothly.

Inheritance Laws for NRIs: Understanding Your Rights and Legal Process

Overview of Inheritance Laws for NRIs


Inheritance in India is primarily governed by personal laws based on religion, such as the Hindu Succession Act, of 1956, for Hindus, Sikhs, Jains, and Buddhists, and the Indian Succession Act, 1925, for Christians and other communities. Muslims, however, are governed by their laws which include specific inheritance rules. Understanding which law applies to you is the first step in determining your inheritance rights as an NRI.

Also Read: Coparcener In Hindu Law – Meaning & Legal Rights

Key Legal Rights for NRIs


NRIs have the same rights as Indian residents when it comes to inheriting property or assets in India. Whether it is ancestral property, self-acquired assets, or jointly-owned property, NRIs can inherit, own, and transfer immovable assets like land and buildings, as well as movable assets such as bank accounts, stocks, or mutual funds. However, the rights may vary depending on the relationship with the deceased and the applicable inheritance law.

Types of Property and Inheritance


Understanding the types of property is vital for NRIs. Broadly, the property can be categorized into:

  • Ancestral Property: Property inherited up to four generations of male lineage, undivided and passed on according to personal laws.
  • Self-acquired Property: Property acquired by an individual through their income or effort, and bequeathed as per their will or personal succession laws.

NRIs can inherit both types of property based on the applicable laws and the deceased’s will, if available.

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Process of Claiming Inherited Property


For NRIs, claiming inherited property involves several steps, and understanding these can save both time and legal hassles:

  • Obtain the Death Certificate: The death certificate of the deceased is a mandatory document to initiate the inheritance process. It is required for legal proceedings, transfer of assets, and even for filing taxes.

  • Identify the Applicable Personal Law: The inheritance rules depend on the religion of the deceased, making it essential to know which law applies to the property in question. This will help determine the rightful heirs and their shares.

  • Get the Will Probated: If the deceased has left a will, NRIs need to get it probated in the relevant court, which certifies the validity of the will. This process is mandatory in states like West Bengal, Maharashtra, and Madras.

  • Obtain a Legal Heir Certificate or Succession Certificate: In the absence of a will, NRIs need to obtain a legal heir certificate or succession certificate from the court. This certificate confirms the legal heirs of the deceased and grants them the authority to claim the inheritance.

  • Transfer of Ownership: Once the required certificates are in place, NRIs can initiate the transfer of ownership by submitting the legal documents to the respective authorities such as revenue departments or banks, depending on the nature of the assets.

Taxation on Inherited Property for NRIs


In India, inheritance is not subject to inheritance tax. However, when NRIs decide to sell the inherited property, capital gains tax is applicable. The tax liability depends on the holding period of the property:

  • Short-term capital gains: If the property is sold within two years of ownership, the gains will be taxed at the applicable individual tax rate.
  • Long-term capital gains: If the property is held for more than two years, it is subject to a 20% tax rate with indexation benefits.

NRIs should also consider Double Taxation Avoidance Agreements (DTAA) between India and their country of residence to avoid being taxed twice on the same income.

Repatriation of Inherited Funds


NRIs can repatriate the funds from the sale of inherited property, subject to certain conditions laid down by the Reserve Bank of India (RBI). They need to submit documents like a tax clearance certificate, proof of inheritance, and proof of repatriation eligibility. The repatriation limit is generally up to $1 million per financial year, and proper compliance with RBI guidelines is necessary.

Common Challenges and Solutions for NRIs


NRIs often face challenges such as legal disputes over property rights, issues with tenants, or lack of awareness about legal processes. To avoid complications:

  • Seek professional legal help to understand your rights and obligations.
  • Appoint a Power of Attorney (PoA) if you cannot visit India frequently. A trusted representative can handle legal matters and documentation on your behalf.
  • Maintain accurate records of the inherited property and related transactions to ensure a smooth legal process.

Final Thoughts


Navigating inheritance laws can be complex, especially for NRIs dealing with property in India. Being aware of your rights and understanding the legal procedures can help you safeguard your interests and assets. Consulting a legal expert to handle inheritance matters and provide proper guidance is always recommended.

Understanding these laws not only helps NRIs manage their inheritance but also protects them from legal complications. A planned approach towards claiming inherited property ensures a smoother experience, while proper tax planning can lead to significant savings.
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Q1. What are the inherited rights of property law?

Under the property inheritance law, i.e., Hindu Succession Act, a son and daughter have the right to ancestral property by birth. A father cannot dispose of such property by excluding his rightful legal heirs. A father cannot transfer/ sell or gift such property according to his discretion to any third person.

While the division of land is the most direct outcome of inheritance, it can indirectly contribute to other issues such as land disputes, and, in some cases, may influence land use and contribute to environmental concerns.

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Ashiana, Ashiana Housing build homes. Homes surrounded by vast green spaces and fresh breeze. Homes cocooned in secured gated complexes. Homes where futures are forged and there are opportunities to grow. And Homes in environments brimming with healthy activity, trust and respect. At heart, we build communities with care.

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