NRI & Foreign Buyers
NRI Property Inheritance in India
The one route by which an NRI can lawfully hold a field in India. And the paperwork that, left undone, quietly destroys the value of what was left to you.
The short answer
An NRI or OCI may INHERIT any Indian property — including agricultural land, a farmhouse or a plantation, which they could never have BOUGHT.
Inheritance is treated entirely separately from purchase under FEMA, and it is expressly permitted.
But: get the MUTATION done. Promptly. The commonest way an NRI loses inherited property is not fraud — it is neglect.
What you may inherit
| Property type | Can an NRI BUY it? | Can an NRI INHERIT it? |
|---|---|---|
| Residential | Yes | Yes |
| Commercial | Yes | Yes |
| Agricultural land | NO | YES |
| Farmhouse | NO | YES |
| Plantation | NO | YES |
You may inherit from a person resident in India. You may also inherit from a person resident outside India, provided THEY acquired the property in accordance with the foreign exchange law in force at the time.
The documents you'll need
What you need depends on whether there was a will.
| Situation | What you need |
|---|---|
| There was a WILL | The will, and — in some jurisdictions and for some property — a probate. Probate is mandatory in certain presidency towns; elsewhere it may not be, but a bank or sub-registrar may still want it. |
| No will (intestate) | A Succession Certificate (for debts and movable assets) and/or a Legal Heir Certificate. For immovable property, an application to the court may be needed. |
| In every case | Death certificate. Proof of relationship. The title deeds of the property. The revenue records. An encumbrance certificate. Your PAN and passport. |
| Multiple heirs | A relinquishment deed (if others give up their share to you) or a partition deed (if you divide it). Register it. |
Get the mutation done. This is the big one.
Your father dies. The land is yours. You are in Chicago. You are grieving, and busy, and the land is in a village you have not visited in fifteen years.
You do nothing.
The revenue record still says your father's name. And then:
• Someone else occupies it. Years pass. Adverse possession becomes an argument they can make.
• A relative 'looks after it' and, over a decade, begins to describe it as theirs.
• The land is sold using a forged document, and you find out in 2034.
• You want to sell, and discover the title is a mess that will take three years and a lawyer to unpick.
• Other heirs die, and now their children are parties too, and there are eleven of them across four countries.
Every one of these gets worse with time, and none of them fixes itself.
1. Get the death certificate.
2. Establish the succession — will, probate, or succession/legal heir certificate.
3. APPLY FOR MUTATION. Get your name onto the revenue record — the 7/12, RTC, patta, khasra, khata.
4. Sort out the other heirs. Relinquishment or partition, registered. Do this while everyone is alive and speaking to each other.
5. Pay the property tax. Arrears follow the property.
6. Physically secure it. A boundary wall. A caretaker you actually pay. Someone who visits.
7. Get an encumbrance certificate once a year. It is cheap, and it tells you if anything has been registered against your property without your knowledge.
That last one takes ten minutes online and would prevent a very large share of the disasters on this page.
Selling what you inherited
- Residential or commercial: sell to anyone — resident, NRI, OCI. Normal rules.
- Agricultural land, farmhouse, plantation: you may sell ONLY to a person resident in India. Not to another NRI. Not to an OCI. And the buyer must also be eligible under that state's own agriculturist and ceiling rules, which are strict in Karnataka, Maharashtra and Gujarat.
- Proceeds go to your NRO account, and repatriation is subject to the USD 1 million per financial year cap, with Forms 15CA and 15CB.
- TDS under Section 195 applies, as on any NRI sale. Consider a Lower Deduction Certificate.
Tax on inherited property
There is no inheritance tax or estate duty in India. Receiving the property costs you nothing in tax.
But when you SELL, capital gains apply — and the computation reaches back:
• Your cost of acquisition is the cost to the previous owner — the person you inherited from.
• The holding period includes theirs. So if your father bought it in 1998, your holding period runs from 1998, and the gain is almost certainly long term.
• As an NRI: 12.5% without indexation. No grandfathering option.
• Sections 54, 54F and 54EC are available — reinvest and you can exempt the gain.
Which means you need your father's purchase deed from 1998. Find it. Now. Before it is genuinely lost, and before the people who knew where it was are gone.
FEMA rules, tax rates and repatriation limits are amended by Budget, by RBI Master Direction, and by circular — sometimes more than once a year.
We have written this against the position as we understand it, and checked it. But we are not chartered accountants or lawyers, and this is not advice.
Before an NRI property transaction, engage a CA who does NRI work. On a transaction of this size, in a regime with a three-times penalty for getting it wrong, it is the cheapest insurance available.
Frequently asked questions
Can an NRI inherit agricultural land in India?
Yes. Inheritance is treated entirely separately from purchase under FEMA, and it is expressly permitted — so an NRI may inherit agricultural land, a farmhouse or a plantation, which they could never have bought.
Is there inheritance tax in India?
No — there is no inheritance tax or estate duty. Receiving the property costs you nothing in tax. But when you SELL, capital gains apply, and your cost of acquisition is the cost to the person you inherited from, with their holding period counting as yours.
What should an NRI do immediately after inheriting property?
Get the mutation done. The commonest way an NRI loses inherited property is not fraud — it is neglect. If the revenue record still says your father's name, someone may occupy it, a relative may come to describe it as theirs, or it may be sold with a forged document. Every one of those gets worse with time and none fixes itself. Establish the succession, apply for mutation, sort out the other heirs by registered deed, pay the property tax, and physically secure it.
Who can an NRI sell inherited agricultural land to?
Only to a person resident in India — not another NRI or an OCI — and the buyer must also be eligible under that state's agriculturist and land-ceiling rules. Proceeds go to an NRO account, repatriable up to USD 1 million per financial year.
How is capital gains calculated on inherited property?
Your cost of acquisition is the cost to the previous owner, and their holding period counts as yours — so if your father bought in 1998, your holding period runs from 1998 and the gain is almost certainly long term. Which means you need his 1998 purchase deed. Find it now, before it is genuinely lost and before the people who knew where it was are gone.