Inheriting property located in India, by non-resident Indians can sometimes be a complicated task to handle, particularly for those persons who have been living away from India for a long time.  NRIs who inherit property may find themselves faced with questions such as:

1.Sale of the inherited property

2.Legality of ownership

3.Are taxes to be paid?

4.Repatriation of the sale proceeds, etc.

Who can inherit immovable property in India

There are some situations, where Indian residents tell their non-resident relatives that they cannot inherit property and land in India, as they are foreigners. But, this is certainly not true. Anyone can inherit property in India, whether they are persons of Indian origin (PIO holder) or not. Even foreign citizens, who may have not even visited India, can also inherit Indian property. NRIs can inherit not only residential and commercial property but also agricultural and plantation lands. Even though NRIs cannot acquire plantation property and agricultural land through the way of gift, but they can legally inherit it. The only exceptions here are:

1. A foreigner of most of the nations can inherit property and land in India without any Reserve Bank of India (RBI) permission. However, citizens of Pakistan, Afghanistan, Sri Lanka, Bangladesh, Iran, Nepal China, and Bhutan must seek prior approval from the Reserve Bank of India.
2. In the circumstances, where the property is being inherited by an individual who is resident outside India, and there is a condition that the property must have been acquired, under the (FEMA) foreign exchange applicable laws that were in effect when the property was purchased.

Clarification: An individual who purchased property in contradiction of the foreign exchange law in force or FEMA regulations, appropriate at the time of acquisition of the property would not have owned the property legally and therefore cannot pass it on by way of inheritance to anyone.

Tax when inheriting property in India

Inheritance tax is usually known as the Estate Tax/Duty in India. This type of tax was introduced in the year 1953 and was abolished in 1985 when Mr. V P Singh was the Finance Minister.  Currently, when inheriting property, there is no inheritance tax in India.

It becomes essential for NRIs to be aware of all the rules – regulation and obligations with regards to the inheriting property in India. Consult a property lawyer in Chandigarh to take legal advice on inheriting property in India.