Inheritance

Any asset / wealth devolving on to the beneficiaries by virtue of succession on demise of a person is Inheritance.

Following are the 3 Legal Statutes prevailing in India that deal with devolution of the estate / assets / wealth on the death of a person:

  • Hindu Succession Act
  • Indian Succession Act

  • Muslim Law

Practical Considerations

As you may be aware, a Probate is an official evidence of the Executor’s right to dispose off the property of the Testator as per the terms of the WILL.

 

Presently, as per the Succession Law, Probate is mandatory only in the following situations:

  • For WILLs executed by Hindus, Jains, Sikhs and Buddhists within areas under the jurisdiction of Bombay, Madras and Calcutta High Courts;

  • For WILLs outside these areas if they relate to immovable property situated within the jurisdiction of Bombay, Madras and Calcutta High Courts

 

However, recently there have been rising disputes amongst legal heirs contesting distribution of property as specified under the WILLs.

 

Accordingly, owing to recent judgments in this regard and with a view to safeguarding the interests of bonafide legal heirs, it is advisable to obtain Probate for all WILLs irrespective of the place of execution and / or location of the immovable property.

Please note that as per our past experiences, it may take upto one year for obtaining the Probate of a WILL.

Points to Remember:

  • Currently there is no Inheritance / Estate tax applicable in India. Several countries however, levy Inheritance / Estate tax. In this regard, an NRI shall also have to keep in mind the tax implications and reporting requirements of inheritance in his / her country of Residence.

Frequently asked questions

Is any asset / property acquired by way of Inheritance subject to Tax in India?


No, currently there is no Inheritance / Estate tax applicable in India. However, an NRI shall also have to keep in mind the tax implications and reporting requirements of inheritance in his / her country of Residence.




Whether an NRI can acquire property by way of Inheritance?


Any person, whether or not resident / citizen of India is eligible to receive property by way of Inheritance. However, Transfer / Holding of the said property shall be subject to exchange control regulations in India.




If an immovable property is received by way of Inheritance by an NRI, can he / she repatriate the sale proceeds?


Yes, an NRI is eligible to repatriate sale proceeds of an immovable property inherited from a person resident in India subject to certain conditions, payment of taxes and upto the monetary limits specified by RBI.




In case any income is earned from a property acquired by way of Inheritance, is it subject to Tax in India?


Yes, income earned from property acquired by way of Inheritance is taxed in India as under:

  • Upto the date of death - taxed in the hands of the deceased. However, the same would be leviable and recoverable from the legal representatives of the deceased in a like manner and to the same extent as the deceased (liability restricted upto the value of property inherited).
  • After the date of death - taxed in the hands of beneficiaries / executor(s) in their individual capacity.




How will the asset / property be inherited, if a person passes away without a Will?


When a person passes away without a Will, the provisions of the Succession law (as specified in the above Flowchart) shall have to be followed to distribute the deceased person's property among the legal heirs. The rules of succession will determine who the heirs of a deceased are and what would their share be in the Inheritance. Further, an NRI may also have to obtain a Succession Certificate to substantiate that he / she is a legal heir as per the provisions of the Succession Law.





 

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