How an NRI Receives Inherited Money in India: The Account It Lands In, the Papers You Need, and the One Tax That Comes Later

Your mother in Chennai passes away and leaves you, in Toronto or Dubai or New Jersey, a fixed deposit of Rs 40 lakh, a demat account holding shares, and a two-bedroom flat she bought in 2006. Your first worry, conditioned by years of hearing about death taxes in the West, is the tax bill on the inheritance itself. There is none. India abolished estate duty in 1985 and never brought it back. The deposit, the shares and the flat pass to you with zero Indian tax at the moment they become yours, whatever they are worth and wherever you live. The real questions are quieter and more practical: which account does the money land in, what paperwork does the bank demand before it will release a single rupee, how do you get the money out of India, and what tax shows up later when you sell or when the assets start earning.

The 30-second answer: Inheritance is not taxed in India: there is no estate or inheritance tax, and Section 56(2)(x) specifically excludes anything received under a will or by inheritance. Inherited money credits to your NRO account, never NRE. To claim it you need the will, plus a succession certificate (for deposits and securities) or legal heir certificate (where there is no will), and probate where the will is contested or the institution insists. You then repatriate up to USD 1 million per financial year from NRO, net of tax, filing Form 145 yourself and Form 146 from a chartered accountant (the renamed 15CA and 15CB, live since April 1, 2026). The tax that does apply comes later: capital gains when you sell, computed on the previous owner's cost and holding period (Section 49(1)), with the buyer deducting TDS under Section 195; and income such as rent or interest, taxed as it arises. Your host country (US, UK, Canada) may tax the income or the estate.

This guide is the receiving and handling companion to two tax-side pieces. For the full tax map of inheritance and the foreign death taxes that can dwarf the Indian position, read inheritance and estate tax for NRIs. For the deep mechanics of computing and reporting the gain when you sell an inherited flat, read selling inherited property as an NRI. What follows here is the part those guides assume you already have handled: getting the money into your hands, into the right account, and out of the country, with the documentation that keeps the bank from stalling you for months.

The receipt is tax-free, and that is not a loophole you can lose

The single fact that surprises NRIs raised on Western assumptions is that India does not tax inheritance at all. No estate duty, no inheritance tax, no death tax, no return to file when the assets transmit to you. It was not always so. The Estate Duty Act, 1953 taxed property passing on death at rates climbing to 85%, and it was abolished for deaths on or after March 16, 1985 on the view that it raised little, cost a fortune to collect, and double-taxed assets that had already borne wealth tax. Wealth tax itself went in 2016, and no Budget since has reopened the question.

The income-tax law does not merely leave a gap, it affirmatively excludes inheritance. Section 56(2)(x), which taxes gifts from non-relatives above Rs 50,000 as income from other sources, carries an explicit carve-out: it does not apply to any sum of money or property received under a will or by way of inheritance. Under the Income-tax Act, 2025, effective April 1, 2026, this provision is renumbered but the exclusion is carried over word for word. Three things follow, and they hold whatever your residential status. The amount is irrelevant: inherit Rs 5 lakh or Rs 50 crore, receipt is not taxable. The asset type is irrelevant for receipt: cash, a flat, agricultural land, shares, fund units, gold, an FCNR deposit, all pass tax-free at transfer. And your being an NRI is irrelevant: the flat passes to you in London exactly as it would to your sibling in Mumbai.

This matters because families sometimes do the wrong thing out of impatience. They "gift" an asset to the NRI child during the owner's lifetime, when waiting for it to pass by will would have been cleaner and, for a non-relative chain, cheaper. A lifetime gift can trip Section 56(2)(x) and, since the 2019 and 2023 amendments, a resident-to-NRI cash gift can be deemed to accrue in India. Inheritance sidesteps all of that. If a parent is weighing how to pass an asset to a child abroad, the will route is usually the tax-clean one. For the contrast in full, see gift tax for NRIs in India.

Inherited money lands in your NRO account, not NRE

Here is the rule that decides everything downstream: India-sourced money an NRI receives goes into the NRO (Non-Resident Ordinary) account, and inheritance is India-sourced money. You cannot route it into an NRE account. NRE is reserved for foreign earnings you remit into India, and the entire system that makes NRE freely repatriable depends on it never being contaminated with rupee income that might carry an Indian tax liability. Inheritance, rent, dividends, NRO interest and the proceeds of selling Indian assets all share the NRO account, and they all share the repatriation cap that comes with it.

What this looks like in practice depends on the asset. If you inherit cash or a bank deposit, the bank will not simply re-title the deceased's account to you as a resident account, and it will not hand you the balance in your local currency abroad. Once the succession formalities are done, the balance is moved into your NRO account in India. If you inherit shares or a demat account, the securities are transmitted into a demat account in your name (an NRI demat on the NRO non-repatriable side), and when you sell, the proceeds credit to the linked NRO account. If you inherit property, nothing credits anywhere until you sell it; at that point the sale consideration, net of the buyer's TDS, lands in NRO.

The single most common avoidable delay is not having the NRO account ready. Banks will not park an inheritance in limbo while you scramble to open one, and opening an NRO account from abroad takes its own time with KYC and attestation. Get it open early. If you do not yet have one, start with opening an NRE or NRO account from abroad and the NRE, NRO and FCNR comparison. If you held a resident account in India before you moved abroad and never converted it, that is its own urgent housekeeping; see converting a resident account to NRO.

The documentation: will, succession certificate, legal heir certificate, probate

This is where time actually goes. The Indian succession system is document-driven, and the institution holding the asset (a bank, a registrar, a sub-registrar's office) decides what it will accept before it releases anything. The papers fall into a small set, and which one you need depends on whether there is a will and what kind of asset you are claiming.

The will. If the deceased left a valid will, that is the starting document. A will naming you as the beneficiary of a specific asset is the cleanest path, because it states the testator's intent directly. Keep the original. Banks and registrars want to see it, and in some states and some situations they want it proved.

Probate. Probate is a court's certification that a will is genuine and that the named executor may act on it. It is not always required. It becomes necessary when the will is contested, when the asset-holding institution insists on it, or, as a matter of law, for wills made by Hindus, Buddhists, Sikhs or Jains relating to immovable property within the ordinary original civil jurisdiction of the Bombay, Calcutta and Madras High Courts (broadly, property in Mumbai, Kolkata and Chennai). Outside those situations probate is often skippable, which saves months. Where it is required, budget for a court process that can run several months and carries court fees scaled to the value of the estate.

Succession certificate. Where there is no will, and you are claiming debts and securities, bank deposits, fixed deposits, shares, debentures, the relevant instrument is a succession certificate under the Indian Succession Act, 1925, issued by a district court. It establishes who is entitled to receive the money and securities of the deceased. It does not cover immovable property; it is specifically the instrument for movable financial assets when intestacy means there is no will to rely on. Banks routinely demand it before releasing a sizeable deposit to legal heirs in the absence of a will.

Legal heir certificate. This is a lighter document, issued by local revenue authorities (the tahsildar or equivalent), identifying the legal heirs of the deceased. It is used for transferring utilities, claiming provident fund or pension dues, and as supporting proof of who the heirs are. It is not a substitute for a succession certificate where a court order is needed, but it is often the first document a family obtains and is enough for smaller and administrative transfers.

Alongside whichever of these applies, assemble the supporting set, and assemble it once: the death certificate, proof of your relationship to the deceased, your PAN and passport and OCI or visa, and, critically for later, the original purchase documents of the deceased. You need the previous owner's cost and date of acquisition to compute capital gains when you eventually sell, and chasing those papers years later, after the seller is gone, is a needless ordeal. For property specifically, get the mutation done so the municipal and revenue records show the title in your name; without mutation a future sale stalls.

For the banking-side mechanics of nomination, transmission and how a well-set-up account smooths all of this, see NRI account nomination and succession. And if you will be managing any of this remotely through a relative or professional in India, power of attorney for NRI banking and property is the document that lets someone act for you without you flying back for every signature.

Getting the money out: the USD 1 million repatriation route

Once the funds are in your NRO account and the Indian tax position is clean, repatriation runs on a well-worn track. You can remit up to USD 1 million per financial year (April 1 to March 31), net of taxes, from your NRO account, with no Reserve Bank of India approval needed below that ceiling. Above USD 1 million in a year you need prior RBI approval through your bank, decided case by case.

Two features of this limit decide how you plan a large estate. First, it is pooled per person. It is not USD 1 million per property or per source. Inheritance, rent, NRO interest, dividends and sale proceeds all draw on the same single USD 1 million bucket, and once it is empty you wait for the next financial year. Second, there is no lifetime cap. The USD 1 million resets flat every year, so a Rs 8 crore estate that exceeds one year's limit can simply be moved across consecutive financial years. The two levers for moving more in a hurry are to straddle the year-end (a remittance on March 28 and another on April 3 fall in two different limits) and to use a spouse's separate USD 1 million where the inheritance can legitimately be shared. The full sequence, the timeline, and the traps live in the dedicated guide on the NRO repatriation process. The property-sale-specific repatriation detail is in repatriating sale proceeds after a property sale and selling property in India as an NRI.

The forms are the gate, and they were renamed this year. Under the Income-tax Act, 2025, in force from April 1, 2026, Form 15CA became Form 145 and Form 15CB became Form 146. Because we are now in FY 2026-27 these are the live numbers your bank and CA will use, and anything filed as 15CA or 15CB before March 31, 2026 stays valid for remittances dated on or before the form. The substance is unchanged. Form 146 is the chartered accountant's certificate, attesting the nature of the income, the correct tax treatment, that TDS or self-assessment tax is deducted or paid, and that the remittance complies with the Act and FEMA. Form 145 is your own declaration, filed by you on the e-filing portal, referencing Form 146. The order is unforgiving: the CA issues Form 146 first, you file Form 145, then the bank acts. Once your taxable remittances cross Rs 5,00,000 in aggregate for the year, the CA certificate stops being optional, and almost any serious inheritance clears that line, so budget the CA fee and a day or two of lead time from the start.

One point that confuses people: pure inheritance receipt is not chargeable to tax, so where you are repatriating, say, an inherited cash deposit on which no Indian tax arises, the remittance can fall in the "not chargeable to tax" part of Form 145. But the moment the money in your NRO account includes the proceeds of selling an inherited asset, capital gains tax enters the picture, and that is the part the CA certifies before the money moves. Which brings us to the only tax that actually bites.

The tax that does apply: capital gains when you sell

The absence of an inheritance tax does not make an inherited estate tax-free forever. Two things are taxed later, and the larger of the two is the capital gain when you sell.

The rule that governs it is Section 49(1): your cost of acquisition is the price the previous owner paid, not the market value on the date you inherited. And under Explanation 1 to Section 2(42A), the previous owner's holding period is added to yours. So a flat your mother bought in 2006 and you inherited in 2024 is long-term in your hands, and your cost is her 2006 cost. This carryover almost always pushes inherited assets into long-term territory, which is good, because the long-term rate is lower. For any transfer registered on or after July 23, 2024, an NRI pays 12.5% without indexation on the long-term capital gain, plus surcharge and cess. If the previous owner acquired the asset before April 1, 2001, you may substitute the fair market value as on April 1, 2001 (capped at the stamp duty value) for the cost, which usually helps; the indexation interaction for NRIs is restricted, so confirm your specific position. The full computation, including how to trace cost back through a chain of earlier inheritances or gifts, is in selling inherited property as an NRI and the broader capital gains tax on shares and mutual funds.

The second taxable item is income the inherited asset earns while you hold it. Rent on the inherited flat is taxable in the year it arises; interest on inherited deposits is taxable; dividends are taxable. None of this is special to inheritance, it is ordinary NRI income tax, but it starts the moment the asset is yours. See tax on Indian rental income for NRIs and tax on NRO interest.

TDS on the property sale, and why it overshoots

When you sell inherited property as an NRI, the buyer must deduct TDS under Section 195 on the entire sale consideration, not just the gain. For a long-term sale the buyer withholds 12.5% plus surcharge plus 4% cess on the full sale price, an effective rate around 14.95% at the base level (higher once surcharge bites at larger values). Because this is charged on the whole price rather than the profit, the TDS routinely far exceeds your actual tax, locking up cash you then reclaim as a refund a year later.

The fix is to apply ahead of the sale for a lower or nil deduction certificate under Section 197, which tells the buyer to deduct only on the real gain (or on a reduced figure if you are reinvesting under Section 54 or 54EC or 54F). This single step is the most valuable piece of planning for an NRI selling inherited property, because it stops the over-withholding before it happens. The mechanics are in the lower TDS certificate, Form 13 and TDS for NRIs and refunds. For the exemptions that can cut the gain to zero, see capital gains exemptions under Sections 54, 54EC and 54F.

A worked example: inheriting and selling a flat, then repatriating

Take a concrete case. Your mother bought a flat in Pune in June 2006 for Rs 22,00,000, including registration and stamp duty. She passed away in March 2024 and the flat came to you under her will. You live in Dubai. In September 2026 you sell the flat for Rs 1,30,00,000.

Step 1: receipt is tax-free. Inheriting the flat in March 2024 triggers no Indian tax. There is nothing to file on receipt and nothing to repatriate yet, because you have not sold.

Step 2: cost and holding period carry over. Under Section 49(1) your cost is your mother's cost, Rs 22,00,000, not the 2024 market value. Under Section 2(42A) her holding period (June 2006) is added to yours, so the asset is comfortably long-term. The acquisition was after April 1, 2001, so no FMV substitution applies here.

Step 3: the long-term capital gain. Sale registered in September 2026 falls under the post-July-23-2024 regime, so the rate is 12.5% without indexation.

• Sale consideration: Rs 1,30,00,000
• Less cost of acquisition (mother's cost): Rs 22,00,000
• Long-term capital gain: Rs 1,08,00,000
• Tax at 12.5%: Rs 13,50,000
• Add surcharge (assume 15% on this gain level): Rs 2,02,500
• Subtotal: Rs 15,52,500
• Add 4% health and education cess: Rs 62,100
• Total tax on the gain: Rs 16,14,600

Step 4: the TDS the buyer deducts. Absent a Section 197 certificate, the buyer deducts TDS under Section 195 on the full Rs 1,30,00,000, at roughly 14.95% effective for long-term, which is about Rs 19,43,500. That is more than your actual Rs 16,14,600 liability, so without planning you over-pay by close to Rs 3,28,900 and wait to reclaim it. Had you obtained a lower deduction certificate pegged to the real gain, the buyer would have withheld near your true liability and freed up that cash at the point of sale rather than a year later.

Step 5: settle and certify. You file your Indian return, reconcile the TDS against your Form 26AS and AIS, pay any balance or claim the refund, and your chartered accountant issues Form 146 certifying the tax position. You file Form 145. See Form 26AS and AIS for NRIs.

Step 6: repatriate. The net proceeds, roughly Rs 1,10,56,500 after TDS, sit in your NRO account. At an assumed Rs 83 to the dollar that is about USD 1,33,200, comfortably inside the USD 1 million annual ceiling, so the whole amount can be remitted to Dubai in this financial year on Form 145 and Form 146, no RBI approval required. Had the estate run to several crore, you would have split the repatriation across two financial years or used your spouse's separate limit.

The honest read on this example: the inheritance itself cost you nothing, the only real tax was the Rs 16,14,600 on the gain, and the avoidable pain was the over-withheld TDS that a Section 197 certificate would have prevented.

Edge cases

Succession certificate versus legal heir certificate. People use these interchangeably and they are not the same. A succession certificate is a district-court order for movable financial assets (deposits, shares) when there is no will, and it is what a bank will demand before releasing a large intestate deposit. A legal heir certificate is a lighter revenue-department document identifying the heirs, fine for utilities, pension and administrative transfers but not a court's authority over securities. Where a bank insists on a succession certificate, a legal heir certificate will not substitute, and pretending otherwise just adds a wasted round-trip.

Probate where it is genuinely required. For wills by Hindus, Buddhists, Sikhs or Jains covering immovable property in the original civil jurisdiction of the Bombay, Calcutta or Madras High Courts (Mumbai, Kolkata, Chennai property), probate is mandatory, not optional. Elsewhere it is usually needed only if the will is contested or the institution insists. Probate is a court process running several months with fees scaled to estate value, so identify early whether your case needs it, because it sets the timeline for everything else.

Agricultural land. An NRI can inherit agricultural land, plantation property and farmhouses in India, even though an NRI cannot buy them under FEMA. That asymmetry matters. You may hold inherited agricultural land, but selling it carries its own restriction: an NRI generally may sell agricultural land only to a resident Indian citizen, not to another NRI or a foreign national. Plan the eventual exit around that constraint rather than discovering it at the closing table.

The host-country angle, which is often the bigger exposure. India charges nothing on receipt, but the country you live in may not be so gentle. A US green-card holder or US-domiciled NRI is taxed on their worldwide estate at death, the Indian flat included, with a large exemption (USD 15 million in 2026) but rates to 40%; a non-resident alien holding US-situs assets gets only a USD 60,000 exemption. UK inheritance tax, from April 6, 2025, follows a long-term-residence test and can pull your worldwide estate into IHT at 40% above the 325,000 pound nil-rate band. Canada has no estate tax but deems a disposition of assets at death, taxing the capital gain. And separately from death taxes, the income an inherited Indian asset earns, and the gain when you sell it, are usually taxable in your country of residence too, with a credit for Indian tax under the relevant treaty. Work the foreign side in parallel, not as an afterthought. The country detail is in inheritance and estate tax for NRIs, and the credit mechanics in DTAA relief for NRIs and the foreign tax credit and Form 67.

The closing read

The fear most NRIs carry into an inheritance, that India will tax the windfall, is misplaced. India taxes nothing on receipt, and that is settled law, not a loophole. The work is administrative and sequential, not fiscal. Get the NRO account open early, because the money has nowhere else to go. Assemble the right document for the asset, a succession certificate for intestate deposits and securities, probate where the law or the institution demands it, mutation for property, and keep the deceased's original purchase papers because you will need that cost base years later. Then repatriate inside the USD 1 million per year route on Form 145 and Form 146, splitting across years for a large estate.

The only tax that genuinely bites is the capital gain when you sell, computed on the previous owner's cost, and the only avoidable pain is the over-withheld TDS on a property sale, which a Section 197 certificate prevents. Get those two right and the rest is paperwork. The real risk usually does not sit in India at all; it sits in the US, UK or Canadian rules on the income and the estate, so handle the foreign side in parallel from the first week, not after the Indian money has already landed.

Related guides

• Inheritance and estate tax for NRIs
• Selling inherited property as an NRI: the tax
• The NRO repatriation process
• NRE, NRO and FCNR accounts compared
• Opening an NRE or NRO account from abroad
• NRI account nomination and succession
• Power of attorney for NRI banking and property
• The lower TDS certificate, Form 13
• TDS for NRIs and refunds
• Capital gains exemptions under Sections 54, 54EC and 54F
• Selling property in India as an NRI
• Gift tax for NRIs in India
• DTAA relief for NRIs
• Tax on Indian rental income for NRIs

This guide is general information, not tax, legal or investment advice, and it does not create a professional relationship. Inheritance, succession and repatriation rules turn on the facts of your case, the state and institution involved, and your country of residence, and they change. The figures, rates and form numbers reflect the position as understood in 2026 under the Income-tax Act, 2025 and FEMA; verify the current law and consult a qualified chartered accountant and a lawyer in both India and your country of residence before acting.