India–US Life

Inheritance Across Borders: The Complete India–US Playbook

Written and verified by the SOSGI Editorial Team

12 min read · Updated September 22, 2026

When a parent's assets in India pass to a child living in the United States, two legal systems meet — and the central rules are more orderly than the anxiety around them suggests. India does not currently levy a central inheritance tax or estate duty.

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When a parent's assets in India pass to a child living in the United States, two legal systems meet. The central rules are more orderly than the anxiety around them suggests: India does not currently levy a central inheritance tax or estate duty, and US federal income-tax law generally does not tax an heir merely for receiving an inheritance. What both countries require is procedure and disclosure: establishing the right to inherit under Indian succession law, moving each asset through its own transmission process, remitting funds under the Reserve Bank's rules, and making any required US information filings, on forms that carry penalties for silence rather than for the inheritance itself. State-level US taxes, post-death income, the asset type, the will, the deceased's personal law and the amounts involved can all change the result. This guide sets out all of it, from the statutes, the Reserve Bank and the IRS.

India has no central inheritance tax or estate duty — and has not since 1985

India once levied estate duty on property passing at death under the Estate Duty Act, 1953. That levy was ended by amendment: the Income Tax Department's own explanatory material records that the Act ceased to apply to property passing on the death of any person on or after March 16, 1985 (and to agricultural land in the relevant States and Union Territories from October 24, 1984). The Act itself now appears among India Code's repealed statutes. There is no central inheritance tax, estate duty or death duty in India today. That does not make the process cost-free: court fees on probate or a succession certificate, mutation charges, registration-related costs, professional fees, and tax on income or later gains can still arise.

Nor is an inheritance income. Section 56(2)(x) of the Income-tax Act, 1961 treats certain money and property received without consideration as income from other sources, but its proviso expressly excludes property received under a will or by way of inheritance, and separately excludes gifts from 'relatives' as the section defines them. What India does tax is what the asset earns after it becomes yours — rent, interest, dividends and capital gains on a later sale — under the ordinary rules for non-residents. One dating note on the numbering: the Income-tax Act, 2025 replaced the 1961 Act from April 1, 2026. The provision described above is the one long known as section 56(2)(x); in the current Act it is section 92(2)(m), and the exclusion for property received under a will or by way of inheritance is at section 92(3)(c), with the exclusion for receipts from a relative at section 92(3)(a) and 'relative' defined at section 92(5)(g). The current text is linked below.

Which law governs the estate: will, personal law and the Succession Act

If the deceased left a valid will, the will governs the distribution of the estate. If there is no valid will, succession is determined by the law applicable to the deceased. This commonly means the Hindu Succession Act, 1956 for Hindus, Buddhists, Jains and Sikhs, which sets out the classes of heirs and the shares each takes; the intestate-succession rules of the Indian Succession Act, 1925 for Christians and Parsis and in other circumstances the law specifies; and Muslim personal law for Muslims. A marriage solemnized under the Special Marriage Act, 1954, the deceased's domicile and the nature and location of particular property can change the analysis, so the applicable regime should be confirmed for the individual estate. Both Acts are published in full on India Code.

The Indian Succession Act, 1925 provides the principal court processes — probate, letters of administration and succession certificates. Whether a particular court order is legally required, and what a bank, depository, registrar or land authority will accept, depends on the will, the deceased's personal law, the asset, the location of the property and the institution's own transmission rules. Section 213 does not make probate universally mandatory for every Indian will: it restricts the establishment in court of a right as executor or legatee unless probate or letters of administration have been obtained, and its application depends on the categories of wills covered by section 57, which turn on where the will was made and, in some cases, where immovable property is situated. The former Presidency-town rules in section 57 are technical and fact-specific. Read the two sections on India Code, and have a lawyer confirm whether probate or letters of administration are required before an executor attempts to transfer an asset or bring a court proceeding.

Proving the right to inherit: the documents institutions ask for

Where probate applies, the executor applies to the competent court for probate of the will; where there is no will or no executor, the heirs may apply for letters of administration. For debts and securities — bank deposits, shares, bonds — Part X of the Indian Succession Act provides the succession certificate, granted by a district court, which entitles the holder to receive and deal with those assets; it is not the instrument for land. Each of these is a court document, issued after notice and the opportunity for objections, and institutions may instead or in addition ask for affidavits, indemnities, no-objection letters from other heirs, legal-heir certificates or their own transmission forms, depending on the asset and the amount.

For land and buildings the operative record step is mutation: the local revenue or municipal authority records the heir as the holder in its records on the strength of the death certificate, the will or succession documents, and the identity papers of the heirs. Mutation updates the revenue record for tax and administrative purposes; it is not by itself conclusive proof of title. Legal-heir certificates are issued by state revenue authorities under state procedures. The death certificate itself is issued under the Registration of Births and Deaths Act, 1969 by the local registrar, and every later step begins with it.

Nominations: what they settle and what they do not

Nominations simplify transmission, but their legal effect varies by asset class. For bank deposits, a nominee generally receives payment from the bank so that the bank obtains a valid discharge; the ultimate beneficial entitlement among the heirs remains governed by the will or the applicable succession law. The Reserve Bank's Master Circular on Customer Service in Banks (July 2015 consolidation) directs banks to make it clear to a nominee that the payment is received as a trustee of the legal heirs of the deceased depositor, and applies the same principle to locker contents. The position for demat securities, shares and mutual funds can depend on the governing statute, the account terms and judicial decisions, so the institution's transmission rules and legal advice should be checked before treating a nominee as the final beneficial owner.

Life insurance is different and should not be put in the same bucket. Section 39 of the Insurance Act, 1938, as amended by the Insurance Laws (Amendment) Act, 2015, generally provides that where the policyholder nominates parents, spouse or children (or any of them), the nominee is beneficially entitled to the amount payable, subject to the Act's terms and to proof that the policyholder could not have conferred that beneficial interest; the section also preserves creditors' rights and applies to policies maturing after the amendment took effect. Whether a particular policy nomination carries beneficial title therefore depends on who was nominated, the statutory provisions, the policy documentation and the facts of the estate, and it should be reviewed before assuming that the bank-deposit rule applies. For NRI families the practical rule is to keep both layers current — the parent's nominations at every bank, depository and insurer, and a will that says who is to inherit what — so that the transmission and the entitlement point to the same people.

Inherited Indian immovable property: NRIs and OCIs may inherit agricultural land

The rules on foreign-resident ownership of Indian immovable property come from the Foreign Exchange Management Act, 1999 and the rules made under it, now the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, which the Reserve Bank explains in its FAQ on purchase of immovable property in India. An NRI or OCI may acquire immovable property in India other than agricultural land, a farmhouse or plantation property by purchase, or by gift from a relative; those three categories cannot be bought or received as a gift.

Inheritance is the exception the Reserve Bank spells out. Under the immovable-property rules, an NRI or OCI may acquire any immovable property in India by inheritance — including agricultural land, a farmhouse or plantation property — from a person resident in India, or from a person resident outside India who had acquired the property in accordance with the foreign-exchange law in force at the time. Separate FEMA rules govern inherited securities, business interests and other regulated assets, which this guide does not cover. The restrictions return at the point of sale: agricultural land, farmhouses and plantation property held by an NRI or OCI may be transferred only to a person resident in India who is a citizen of India, while other property may be sold to residents, NRIs or OCIs.

The NRO account: where inherited rupee funds are handled

In practice, inherited Indian rupee funds received by an NRI or OCI — transmitted bank balances, rental income from an inherited flat, the proceeds of a sale — are ordinarily held and handled through a Non-Resident (Ordinary) rupee account, subject to the authorized dealer bank's documentation and the FEMA rules. The Reserve Bank's FAQ on accounts in India by non-residents describes the NRO account as the account for income and funds arising in India, including the proceeds of assets acquired by inheritance, and sets out the credits and debits it permits. The receiving bank's account-opening, KYC, tax-deduction and remittance procedures control the mechanics: an NRO account is commonly used, but the correct account treatment should be confirmed with the bank before funds are transmitted. A resident rupee account held by the heir before leaving India generally must be re-designated as an NRO account when the holder becomes a person resident outside India, under the Reserve Bank's rules and the bank's process.

Interest earned on an NRO account is taxable in India and is subject to tax deduction at source; the same is true of rent on inherited property and of capital gains on its sale, where the buyer deducts tax at the time of payment to a non-resident. Deduction at source is now governed by section 393 of the Income-tax Act, 2025 (Chapter XIX), which replaced the 1961 Act's section 195 from 1 April 2026; the lower- or nil-deduction certificate route is at section 395. Our guide 'Owning Property in India as a US-Based NRI' covers the sale, the deduction at source and the lower-deduction certificate route in detail. The point for a US heir is that income the asset produces after inheritance — NRO interest, rent, dividends and later gains — must be evaluated for US worldwide-income reporting, alongside the Indian tax reporting and withholding that apply.

Remitting the inheritance to the United States: the USD 1 million facility

Remittance of inherited assets out of India is governed by the Foreign Exchange Management (Remittance of Assets) Regulations, 2016, notified as FEMA 13(R)/2016-RB, and consolidated in the Reserve Bank's Master Direction on Remittance of Assets. Under those provisions a non-resident Indian or person of Indian origin (the regulation's own terms) may remit through an authorized dealer bank an amount not exceeding USD 1,000,000 per financial year out of the balances in NRO accounts or the sale proceeds of assets, including assets acquired by way of inheritance or legacy, on production of documentary evidence of the acquisition, inheritance or legacy and an undertaking by the remitter. The facility is measured per eligible remitter for each Indian financial year (April to March); where funds remain validly held in the NRO account and the bank accepts the documentation and tax-compliance position, remittances may be made over more than one financial year. Remittances beyond the limit on account of legacy, bequest or inheritance generally require the Reserve Bank's prior approval.

The tax-compliance paperwork depends on the remittance. For remittances made on or after 1 April 2026 the forms are Form 145 and, where applicable, Form 146. Those are the forms historically known as 15CA and 15CB, which were part of India's reporting framework for payments to non-residents under Rule 37BB of the Income-tax Rules, 1962. Those are the numbers the forms are known by under the 1961 Act and the 1962 Rules. For remittances made on or after 1 April 2026, Form 145 replaces Form 15CA and Form 146 replaces Form 15CB under the Income-tax Act, 2025, and the Income-tax Rules, 2026 replaced the 1962 Rules; forms already submitted for remittances made on or before 31 March 2026 remain valid on the Department's stated conditions. The Department publishes a form-mapping guide, linked below. Whether a particular inheritance remittance requires Form 145, which part of the form applies, and whether an accountant's certificate in Form 146 is needed depends on taxability, the amount, the rule's exceptions and the authorized dealer bank's documentation requirements; the Income Tax Department's own guidance for Form 146 states that the accountant's certificate is required where the payment is chargeable to tax and the payment, or the aggregate of such payments, exceeds ₹5 lakh in the tax year and a certificate from the Assessing Officer under section 395(1) or 395(2) has not been obtained — the case in which Part C of Form 145 is filed alongside it. Form 145 has four routes, and only one of them calls for the accountant: Part A where the remittance is taxable under the Act and the remittance, or the aggregate of such remittances, does not exceed ₹5 lakh during the tax year; Part B where it is taxable and exceeds ₹5 lakh and the Assessing Officer's certificate has been obtained; Part C where it is taxable and exceeds ₹5 lakh, which requires Form 146; and Part D where the remittance is not taxable under the Act, other than the payments referred to in Rule 220(3). A remittance that is not taxable under the Act falls under Part D, other than the payments referred to in Rule 220(3), and Part D does not require Form 146. That is the income-tax form; the Reserve Bank's remittance rules in the next paragraph are a separate system with their own documentation, and satisfying one does not satisfy the other. Separately from the tax forms, the Reserve Bank's Master Direction on Remittance of Assets allows the remittance only on submission of documentary evidence to the authorised dealer bank, with an undertaking about the source of the funds where they come from an NRO account, and states that the remittance is subject to payment of applicable taxes in India. Those requirements apply even where the inherited principal itself is not taxable income. Confirm with the bank which part applies before the remittance date, and check the amount itself against the Department's current Form 146 user manual ↗, because thresholds like this one are revised from time to time.

The US federal side: an inheritance is generally not income

Under section 102 of the Internal Revenue Code, gross income does not include the value of property acquired by gift, bequest, devise or inheritance. A US citizen or resident who inherits money or property from a parent in India therefore owes no US federal income tax on the inheritance itself, whatever its size, and this is not affected by whether the parent was a US person. The IRS page 'Gifts from foreign person' states the position directly: receipt of a gift or bequest from a foreign person is not taxable income, but it may be reportable. The exclusion covers the inherited property itself, not necessarily income that had accrued to the deceased before death and is received afterwards by the heir or the estate — interest earned but unpaid, rent due, receivables, certain retirement-account amounts — which US law treats as 'income in respect of a decedent' under section 691 and taxes to whoever receives it. Interest, rent and other income earned after death are taxable in the ordinary way. A few US states levy their own estate or inheritance taxes. Whether one applies can depend on the deceased's domicile, the type and location of property, the heir's relationship to the deceased and the relevant state's rules; New Jersey's inheritance tax, in the sources, is one example of a state regime.

US federal estate tax is imposed on the estate of the person who died, not on the heir's receipt. Where the deceased was neither a US citizen nor domiciled in the United States, the IRS explains that the estate tax reaches only property situated in the United States, subject to the filing threshold and to asset-classification rules — for example US real estate and stock of US corporations — and the Form 706-NA instructions ↗ require a return only when the value of the decedent's US-situated assets exceeds $60,000 — a figure the IRS restates with each revision of those instructions, so read the current ones before concluding nothing is due. Ordinary deposits with US banks that are not connected with a US trade or business are treated as situated outside the United States under section 2105(b) of the Code, so a parent's US savings account is usually not what triggers a filing. US securities held in a brokerage account can create US-situs exposure depending on the issuer and the instrument; the location of the account alone does not determine the result. The classification of particular accounts and investments should be confirmed, and the IRS's FAQs for nonresident estates and its transfer-certificate page describe what a US bank or broker asks for before releasing assets.

Form 3520: the disclosure that carries the penalty

The reporting obligation attaches to the heir. Under section 6039F of the Internal Revenue Code, a US person who receives gifts or bequests from a nonresident alien individual or a foreign estate must report them on Part IV of Form 3520 when the aggregate amount received from that person or estate in the tax year exceeds $100,000, listing separately each gift or bequest above $5,000; gifts from related donors are aggregated. The $100,000 figure is written into the statute and is confirmed in the Form 3520 instructions ↗ revised December 2025 — instructions the IRS reissues, so read the current edition for that figure and for the itemising line beneath it; the separate, inflation-indexed threshold for purported gifts from foreign corporations or partnerships does not apply to a parent's estate.

Form 3520 is an information return filed separately from the income-tax return — not attached to Form 1040 — and is generally due on the due date, including extensions, of the recipient's income-tax return for that year. The instructions state that if Part IV is not timely filed, or is incomplete or incorrect, the IRS may determine the tax consequences of the receipt itself, and that a penalty under section 6039F(c) of five percent of the value of the gift or bequest for each month of failure, up to 25 percent, may apply unless the failure was due to reasonable cause. Gifts received from parents while they are alive fall under the same rule and the same threshold.

FBAR and Form 8938: once the accounts are yours

Once the US person acquires a reportable financial interest in, or relevant authority over, an Indian account or investment, the account should be reviewed for two separate regimes for that tax year. The precise reporting point can depend on the estate-administration process, the account title and the US reporting definitions; it is not determined by the date of death alone. The Report of Foreign Bank and Financial Accounts, FinCEN Form 114, must be filed for any year in which the aggregate maximum value of all foreign financial accounts exceeds $10,000 at any time, as the IRS's FBAR page ↗ states — confirm the figure there each filing season rather than from memory; the report is filed electronically with FinCEN, not with the tax return. An inherited NRO account holding sale proceeds will usually cross that figure on the day the money arrives.

The Foreign Account Tax Compliance Act adds Form 8938, Statement of Specified Foreign Financial Assets, filed with the income-tax return when the total value of specified foreign financial assets exceeds the thresholds the IRS sets by filing status and by whether the taxpayer lives in the United States. The two regimes overlap but are separate filings with separate thresholds and penalties, and the IRS publishes a comparison table of them. Our guide 'NRI Tax 101' covers both in the ordinary course; the inheritance year is simply the year in which many families cross the thresholds for the first time.

Income from inherited assets, basis and the treaty

From the date of inheritance, income the Indian assets produce — NRO interest, rent, dividends, and gains on a later sale — is part of the heir's worldwide income for US tax purposes and is reported on the US return in the ordinary way. Indian income tax paid on that foreign-source income may be eligible for a US foreign tax credit under section 901 of the Internal Revenue Code and Form 1116, generally subject to US sourcing, limitation, timing, substantiation and election rules; the India–United States income-tax treaty allocates taxing rights for particular categories of income but does not automatically eliminate double taxation in every case. Our 'India–US Tax Treaty' guide sets out how the credit and the treaty fit together.

The two countries measure a later gain from different starting points. For US federal income-tax purposes, inherited property generally takes a basis equal to its fair market value on the date of death under section 1014 of the Code, subject to statutory exceptions and special valuation rules, and that rule is not limited to property inherited from a US person; IRS Publication 551 explains it. India generally looks the other way. Under section 73(1) of the Income-tax Act, 2025 — the provision long known as section 49 of the 1961 Act — where a capital asset became yours 'by succession, inheritance or devolution', the cost of acquisition is 'the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement incurred or borne by the previous owner or the assessee', and the previous owner's holding period counts toward yours. How the two rules interact on a particular sale is the question to put to a cross-border tax professional in the year of inheritance.

Gifts during a parent's lifetime: the same rules, earlier

Many families prefer to transfer assets while the parent is alive. On the Indian side, the provision long known as section 56(2)(x) — section 92(2)(m) of the Income-tax Act, 2025 since 1 April 2026 — excludes gifts received from relatives as the Act defines them, at section 92(3)(a), with 'relative' defined at section 92(5)(g), so a gift from a parent to a child is not income to the child in India; the Income Tax Department's FAQ on who counts as a relative is the source. Immovable property still cannot be gifted to an NRI or OCI where it is agricultural land, a farmhouse or plantation property, under the same rules that govern purchase.

On the US side, a gift from a foreign parent is not income to the recipient, but it is reportable on Form 3520 under the same $100,000 aggregate threshold as a bequest, and an Indian financial account holding the funds may create US foreign-account reporting obligations. These are two separate tests, not one. A US person with a financial interest in, or signature or other authority over, foreign financial accounts generally must file an FBAR if the aggregate value of those accounts exceeds $10,000 at any time during the calendar year. Form 8938 applies at higher thresholds that depend on filing status and on whether the taxpayer lives in the United States or abroad, and each has two tests, a year-end value and a highest value at any time in the year: for an unmarried filer living in the US, more than $50,000 at year end or more than $75,000 at any time; married filing jointly in the US, $100,000 or $150,000; unmarried or filing separately from abroad, $200,000 or $300,000; married filing jointly from abroad, $400,000 or $600,000. The IRS publishes that whole set of thresholds itself and updates the page when they move, so check it on Do I need to file Form 8938? ↗ before deciding you are under them. The IRS states plainly that filing one does not relieve the requirement to file the other, and depending on the facts a person may owe one, both or neither. Which Indian account gifted rupee funds may be held in, and any outward remittance of them, must meet the FEMA, authorised-dealer and Indian tax-reporting requirements that apply to the nature of the gift and how the funds were received. Ask the bank which account applies to the particular receipt rather than assuming. The records a lifetime transfer generates — the gift deed or letter, the bank credit, the applicable Form 145 or Form 146 for a remittance, being the forms long known as 15CA and 15CB, and the Form 3520 — are what the bank and the two tax authorities ask to see.

Planning while parents are alive: what actually shortens the process

Every step in this guide is easier when the estate is documented before it is needed. A valid will avoids intestacy; registration under the Registration Act, 1908 is optional for most wills in India and can help evidentially, but it does not by itself guarantee validity or prevent a dispute. Proper execution, current nominations across every account and policy, an inventory of assets, account numbers, property records and the professionals who hold them, kept by a child in the United States, and accessible records usually matter more than registration alone. Our guide 'Wills and Guardianship: The Documents Every Cross-Border Family Needs' covers the document set on both sides when it publishes.

The order of events after a death in India is then predictable: death certificate; identification of the will or the applicable personal law; probate, letters of administration or a succession certificate where the asset and the institution require one; transmission of each asset and mutation of property; where applicable, an NRO account; remittance under the USD 1 million facility with the tax paperwork that applies; and, in the United States, Form 3520 if the year's receipts exceed the threshold, FBAR and Form 8938 if their separate thresholds are met, and ordinary reporting of the income thereafter. Which steps apply depends on the asset, the will, the deceased's personal law, the institution and the values involved; they are compliance and reporting rules, not a tax on receiving the inheritance itself.

Official sources

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Disclaimer

This article is general information, not professional advice, and does not create any professional relationship. Rules, fees, dates and eligibility change and can vary by state, agency and individual circumstances. Always cross-verify the details against the official sources listed above before you act, and consult a qualified professional about your specific situation.