Introduction
India’s succession laws determine how property and assets are distributed after a person’s death. For Non-Resident Indians (NRIs), inheritance rights are largely the same as for resident Indians. However, NRIs often face additional procedural requirements, documentation challenges from abroad, FEMA compliance issues, and tax considerations. Succession in India is governed either by religion-based personal laws in cases where there is no will (intestate succession) or by statutory law when a valid will exists (testamentary succession).
Which succession laws apply to different religions in India?
In cases of intestate succession, the applicable law depends on the religion of the deceased. Hindus, Sikhs, Jains, and Buddhists are governed by the Hindu Succession Act, 1956. Under this Act, Class I heirs, such as the spouse, children, and mother, inherit simultaneously and in equal shares. If no Class I heirs exist, the property passes to Class II heirs, including the father, siblings, and other relatives. The 2005 amendment strengthened gender equality by granting daughters equal coparcenary rights in ancestral property.
Muslims are governed by the Muslim Personal Law (Shariat) Application Act, 1937. Islamic inheritance law prescribes fixed shares for legal heirs. Typically, a son receives twice the share of a daughter. Testamentary freedom is restricted, as a Muslim can generally will away only one-third of their estate unless the legal heirs consent to a larger share.
Christians, Parsis, and Jews are governed by the Indian Succession Act, 1925. Under this Act, the surviving spouse and lineal descendants are prioritized, and distribution follows statutory guidelines. The Act also governs testamentary succession for most communities in India, except Muslims in general practice.
What happens if there is a will? (Testamentary succession)
When a person leaves behind a valid will, the estate is distributed according to the terms mentioned in the will. Probate may be required in certain jurisdictions depending on local court requirements. NRIs frequently appoint a Power of Attorney (PoA) holder in India to handle probate applications, property transfers, and related formalities on their behalf. Having a properly drafted and legally valid will significantly reduces disputes and procedural delays.
What happens if there is no will? (Intestate succession)
If a person dies without a will, succession is considered intestate, and property distribution strictly follows the applicable personal law based on religion. Legal heir certificates or succession certificates may be required to establish rightful claimants. In cases involving disputes among family members, court proceedings may become necessary to determine the lawful heirs.
Can NRIs inherit agricultural and other properties in India?
Yes, NRIs are permitted to inherit residential, commercial, and agricultural property in India under FEMA provisions. Although there are restrictions on purchasing certain categories of property, such as agricultural land, inheritance of such property is generally allowed. After inheritance, the property transfer must be registered with the local sub-registrar. In many states, stamp duty is not levied on inheritance-based transfers.
What are the tax policies for NRIs on inherited property?
India does not impose inheritance tax. However, any income generated from inherited assets, such as rental income, is taxable in India. If the inherited property is later sold, capital gains tax applies. Long-term capital gains, typically applicable if the property is held for more than 24 months, including the holding period of the previous owner, are taxed at concessional rates. Certain exemptions may be available if the proceeds are reinvested in specified bonds or residential property. NRIs may repatriate sale proceeds up to USD 1 million per financial year from their NRO account, subject to compliance requirements, while higher amounts require approval from the Reserve Bank of India.
Conclusion
Despite clear legal provisions, NRIs often encounter practical challenges such as missing documents, outdated land records, competing family claims, or procedural delays. Disputes may be resolved through mediation, arbitration, or litigation. Given state-specific variations and regulatory requirements, consulting experienced legal professionals in India is advisable to ensure smooth inheritance and lawful transfer of assets.
