NRI Inheritance Tax and Money Repatriation from India: FEMA Rules Explained

You've settled the estate, cleared the bank accounts, sold the inherited property — and now the money is sitting in your NRO account in India. Getting it out of the country legally requires navigating FEMA regulations, tax clearance certificates, and a chartered accountant's certification. Here's the complete process.

Does India Have an Inheritance Tax

No. India abolished estate duty in 1985 and has not reintroduced any form of inheritance or estate tax. You do not pay tax simply for inheriting assets — whether you're a resident Indian or an NRI.

However, income earned from inherited assets (rent, interest, dividends) is taxable. And if you sell inherited property, capital gains tax applies to the profit.

Capital Gains Tax on Inherited Property

When an NRI sells inherited property in India, the tax treatment depends on how long the property was held — counting from when the original owner (the deceased) acquired it, not from when you inherited it.

Long-term capital gains (held over 2 years): Taxed at a flat rate of 12.5% without indexation under the current tax regime. NRIs are explicitly ineligible for the 20% with indexation option that was previously available to resident individuals.

Short-term capital gains (held under 2 years): Taxed at the NRI's applicable income tax slab rate.

The buyer is required to deduct TDS (Tax Deducted at Source) at 12.5% for LTCG or 30% for STCG before paying you. You can claim a refund of any excess TDS when filing your Indian income tax return, or apply for a lower TDS certificate from the Assessing Officer before the sale.

The NRO Account Repatriation Limit

Inherited funds and sale proceeds from inherited assets go into your NRO (Non-Resident Ordinary) account. FEMA regulations allow NRIs to repatriate up to USD 1 million per financial year from their NRO accounts.

This limit covers all remittances from NRO accounts — not just inheritance proceeds. If you're repatriating rental income, dividends, and sale proceeds in the same year, they all count toward the $1 million cap.

For estates exceeding $1 million, you'll need to spread the repatriation across multiple financial years (April to March).

Form 15CA and Form 15CB: The Tax Clearance Process

Every remittance from India requires tax compliance documentation:

Form 15CB is a certificate issued by a practicing Chartered Accountant (CA) in India. The CA verifies that all applicable taxes have been paid on the funds being remitted, calculates the correct TDS, and certifies FEMA compliance. You need a CA — this cannot be self-certified.

Form 15CA is filed online by the remitter (you or your bank) on the Income Tax e-filing portal. It references the Form 15CB certificate and provides the remittance details to the tax department. The bank will not process the international wire transfer without a valid Form 15CA.

The sequence: hire a CA → CA issues Form 15CB → you file Form 15CA online → submit both to your bank → bank processes the remittance.

FEMA Rules for NRI Inheritance

The Foreign Exchange Management Act (FEMA) governs all cross-border money movement. Key rules for NRI inheritance:

Inheriting is allowed. NRIs and OCIs can inherit any type of property in India — residential, commercial, and even agricultural land (which they cannot purchase directly).

Selling restrictions on agricultural land. While NRIs can inherit agricultural land, they can only sell it to a resident Indian citizen. They cannot sell it to another NRI or a foreign national.

Repatriation of sale proceeds. After selling inherited property, the sale proceeds (after tax) can be repatriated through the NRO account within the $1 million annual limit, provided the CA certifies tax compliance via Form 15CB.

Direct property repatriation. If you inherited the property and want to repatriate its value without selling, you'll need a registered valuation and CA certification — but the practical route is to sell and repatriate the proceeds.

Double Taxation Avoidance

India has Double Taxation Avoidance Agreements (DTAAs) with most countries where NRIs commonly reside — US, UK, Canada, Australia, Singapore, UAE. Under these agreements, taxes paid in India on inherited asset income or capital gains can be claimed as a foreign tax credit in your country of residence, preventing you from being taxed twice on the same income.

Keep certified copies of all Indian tax receipts, TDS certificates (Form 16A), and your Indian income tax return for your foreign tax filing.

The Someone Died in India: English Speaker's Emergency Guide includes the complete NRI tax and repatriation playbook — CA engagement checklist, Form 15CA/15CB walkthrough, DTAA country-specific guidance, and the year-by-year repatriation plan for estates exceeding the $1 million annual limit.

See more India guides →