Inherited a flat, house or plot in India from a parent or relative? Here is what NRI families need to know before selling: who the legal heirs are, getting the property into your names, the tax on each share, and getting the money abroad.
Who this guide is for: NRIs, OCIs and foreign citizens who have inherited property in India, especially families with heirs living in different countries.
Updated for the Income-tax Act, 2025. From 1 April 2026, the Income-tax Act, 2025 replaced the Income-tax Act, 1961. The rules covered in this guide are largely the same, but almost every section and form number has changed. This guide uses the new numbers, with the old ones in brackets.
What it covers
Old (1961 Act)
New (2025 Act)
Cost of inherited property (previous owner's cost)
Section 49
Section 73
Fair market value as on 1 April 2001
Section 55(2)(b)
Section 90
Tax on long-term capital gains (12.5%)
Section 112
Section 197
TDS on payments to NRIs
Section 195
Section 393
Lower or nil TDS certificate
Section 197, Form 13
Section 395, Form 128
Exemption: reinvest in a house
Section 54
Section 82
Exemption: capital gains bonds
Section 54EC
Section 85
Exemption: sell other assets, buy a house
Section 54F
Section 86
Remitter's declaration
Form 15CA
Form 145
Chartered Accountant's certificate
Form 15CB
Form 146
Tax treaty relief (DTAA)
Section 90
Section 159
New numbers apply to sales and transfers on or after 1 April 2026 (Tax Year 2026-27). Transactions before that date still follow the 1961 Act. Note that Section 197 now means the tax on long-term capital gains; the lower TDS certificate has moved to Section 395.
Chapter 01
Can an NRI Inherit and Sell Property in India?
Yes. An NRI or OCI can inherit any type of property in India from a relative, including a flat, a house, a plot and even agricultural land. No approval from the Reserve Bank of India is needed to inherit it.
There is also no inheritance tax in India. Receiving the property does not create a tax bill. The tax comes later, when you sell it.
That sale is where most NRI families run into trouble. An inherited property has to pass through several stages before it can be sold cleanly: confirming who the legal heirs are, getting the property into their names, working out the tax on each heir's share, and finally moving the money abroad. Each stage has its own paperwork, and a gap in any one of them can hold up the entire sale.
Agricultural land: NRIs can inherit agricultural land, plantations and farmhouses, but can only sell them to a resident Indian. This narrows the pool of buyers and needs extra care with the paperwork.
Where we help
Map the entire path on day one: heirs, title, valuation, tax and repatriation, specific to your property and your family
Give the whole family one clear timeline and one checklist, so nobody is guessing what comes next
Act as a single point of contact in India, so you are not juggling lawyers, valuers, banks and the tax department yourself
Most NRI families who try to handle this alone come back to us midway. Starting with us saves months.
Chapter 02
With a Will or Without One: Why It Changes Everything
The first question in any inherited property sale is simple: did the deceased leave a valid will?
If there is a will
The property passes to the people named in the will. In some cities, particularly Mumbai, Chennai and Kolkata, a court process called probate may be needed before the will can be acted on. Elsewhere it is often not mandatory, but buyers and their banks may still ask for it if the will is unregistered or likely to be questioned.
If there is no will
The property is divided under succession law. For Hindus, Sikhs, Jains and Buddhists this is the Hindu Succession Act, which typically gives an equal share to the spouse, the children and the mother of the deceased. Other communities follow different laws. Every legal heir becomes a co-owner, whether they live in India or abroad.
Why this matters: when there is no will, every legal heir has to be part of the sale. If one sibling is unreachable, unwilling or missing a document, the whole sale can stall for months.
Where we help
Review the will, or the lack of one, and confirm exactly who the legal heirs are under the law that applies to your family
Coordinate with our lawyers for the legal heir certificate, succession certificate or probate, whichever your case needs
Prepare consent letters, declarations and affidavits so every heir's paperwork is consistent
Keep every heir informed, wherever they live, so decisions are not stuck waiting on one person
Chapter 03
Getting the Property Into the Heirs' Names
A buyer cannot safely purchase a property that is still in the name of someone who has passed away. Before the sale, the records need to show the heirs as the new owners. This usually involves two things.
Proof of who the heirs are: a legal heir certificate, succession certificate or probated will, depending on the situation and the state.
Updating the property records: known as mutation, or khata transfer in Bengaluru, so that municipal and revenue records show the heirs as owners.
These steps involve government offices, sometimes a court, and often take several months. They are also the stage NRIs find hardest to manage from abroad, because offices rarely respond to email and every heir's documents need to match exactly.
Plan for this early. Many families find a buyer first and only then discover the title is not ready. Starting the paperwork before you list the property can save months and keep the buyer from walking away.
Where we help
Our team on the ground files and follows up on the mutation or khata transfer in person, so you don't have to fly down
Track every application and chase every pending approval until it is done
Obtain the supporting records buyers and banks ask for, such as encumbrance certificates and tax receipts
Send you regular updates by WhatsApp or email, so you always know where things stand
Chapter 04
The 1 April 2001 Valuation: The Biggest Tax Saver Most NRIs Miss
When you sell an inherited property, your capital gain is worked out using the original owner's purchase cost (Section 73 of the Income-tax Act, 2025, earlier Section 49), not the value on the day you inherited it. The holding period also includes the time the original owner held the property, so inherited property is almost always treated as long-term.
For older properties this creates a problem. If your father bought the flat in 1995 for a few lakhs, using that tiny figure as the cost makes your taxable gain look enormous.
The law offers a way out. If the property was bought before 1 April 2001, you can use its fair market value as on 1 April 2001 as the cost instead, under Section 90 of the Income-tax Act, 2025 (earlier Section 55(2)(b)). This value has to be supported by a report from a registered valuer, and it cannot exceed the government's guideline value on that date.
An example
Using 1995 purchase price
Using 2001 fair market value
Sale price (2026)
₹1.2 crore
₹1.2 crore
Cost used
₹4 lakh
₹35 lakh
Taxable gain
₹1.16 crore
₹85 lakh
Tax at 12.5% (before surcharge and cess)
₹14.5 lakh
₹10.6 lakh
In this example the family saves close to ₹4 lakh in tax, simply by using the right cost. The higher the 2001 value can be properly supported, the bigger the saving.
Get it right the first time. A weak or unsupported valuation can be challenged by the tax department years later, leading to extra tax, interest and penalties.
Where we help
Arrange the fair market value certificate through a registered property valuer
Review the report so the value is properly supported and within the limits the law allows
Build it into your capital gains calculation so the full saving is claimed
Keep the complete file ready in case the tax department asks questions later
Chapter 05
Capital Gains and TDS When There Are Several Heirs
When a property has several heirs, each person is taxed separately on their own share of the gain. Where each heir lives makes a big difference to how much is held back at the time of sale.
NRI heirs: the buyer must deduct TDS under Section 393 (earlier Section 195) of 12.5% plus surcharge and cess on the NRI's share of the full sale value, not just the gain.
Resident Indian heirs: the buyer deducts only 1% TDS on their share.
An example
A flat sells for ₹1.2 crore and is owned equally by a mother living in India and two children living in the USA and UK. Each share is worth ₹40 lakh.
Heir
Share
TDS held back by buyer
Mother (resident)
₹40 lakh
about ₹40,000
Son (USA)
₹40 lakh
₹5 lakh or more
Daughter (UK)
₹40 lakh
₹5 lakh or more
For the two NRI children, that money can stay locked up until their Indian tax returns are processed, often for over a year. Each NRI heir can apply for a lower TDS certificate under Section 395, using Form 128 (earlier Section 197 and Form 13) before the sale to bring this down, but each application is separate and must be in place before registration.
Capital gains exemptions under Sections 82, 86 and 85 (earlier Sections 54, 54F and 54EC) are also available to each heir individually, if they reinvest within the deadlines.
Where we help
Calculate the capital gains and tax for each heir individually
Prepare, file and follow up on Form 128 (earlier Form 13) for every NRI heir, well before the registration date
Brief the buyer and their CA on the exact TDS for each heir, so nobody is over-deducted
Track exemption deadlines for each heir and file everyone's Indian tax return after the sale
Chapter 06
When Heirs Live in Different Countries
It is very common for heirs to be spread across India, the USA, the UK, the Gulf and elsewhere. The sale can still go ahead without everyone flying to India, but it takes coordination.
Power of Attorney: heirs abroad can authorise someone in India to sign on their behalf. The POA must be correctly worded and properly attested in the heir's country of residence, or it can be rejected at registration.
PAN and bank accounts: each NRI heir needs a PAN and an NRO account in India to receive their share.
Tax where you live: your country of residence may also tax or require reporting of the gain or the inheritance. India's tax treaties (DTAA) usually prevent you paying full tax twice, but only if both sides are handled correctly.
One heir can hold up everyone. If one person's POA is rejected or their PAN details don't match, the entire registration can be delayed. Getting every heir's documents right before the sale date is critical.
Where we help
Draft each heir's Power of Attorney to suit the property and the registration office
Guide every heir through attestation in their own country, step by step
Receive the originals in India and complete stamping and registration
Check every heir's PAN, NRO account and KYC details before the sale date
Schedule calls around each heir's time zone, from Fresno to London to Dubai
Chapter 07
Getting the Money Back to the USA, UK or Elsewhere
Each NRI heir's share of the sale proceeds goes into their NRO account in India first. From there it can be sent abroad, but banks will only release it once the paperwork proves where the money came from and that the tax has been dealt with.
Each NRI can repatriate up to USD 1 million per financial year from their NRO account, which includes property sale proceeds.
For inherited property, banks usually ask for proof of the inheritance in addition to the sale documents.
A Form 145 declaration and a Form 146 certificate from a Chartered Accountant (earlier Forms 15CA and 15CB) are usually needed before the bank will send the money.
Larger amounts may need to be spread across two financial years, which makes the timing of the sale itself worth planning.
Where we help
Our registered Chartered Accountant issues Form 146 (earlier 15CB) and we file the matching Form 145 (earlier 15CA)
Prepare a complete document pack for each heir's bank
Plan the transfers across financial years where the amounts are large
Deal with the bank directly until the money reaches each heir's overseas account
Chapter 08
Common Mistakes NRI Families Make
1. Finding a buyer before the title is ready
Buyers and their banks walk away when the property is still in the deceased's name. The title work should start first.
2. Using the original purchase price for an old property
Skipping the 2001 valuation on a property bought before April 2001 can mean paying lakhs more in tax than necessary.
3. Leaving out a legal heir
An heir who is not part of the sale can challenge it later, putting both the family and the buyer at risk.
4. No Form 128 (earlier Form 13) for NRI heirs
Without it, each NRI heir has 12.5% or more of their share held back, often for over a year.
5. Sending sale money straight to an NRE or foreign account
Sale proceeds must land in the NRO account first. Getting this wrong is a FEMA violation.
6. Not filing Indian tax returns for the year of sale
Each heir who sells must file a return in India. Without it, refunds are lost and notices follow.
Where we help
Start with a full review of your situation, before you speak to buyers
Handle every stage end to end: heirs, title, valuation, tax, Form 128 (earlier Form 13), registration and repatriation
Stay with you until the money is in your account abroad and the tax returns are filed
One team, one plan, from the first call to the final transfer.
Chapter 09
Frequently Asked Questions
No. India does not tax you for inheriting property. Tax applies only when you sell it, on the capital gain.
Yes, in most cases. A correctly drafted and attested Power of Attorney allows someone in India to handle the registration on your behalf.
Each heir owns a share, but buyers rarely purchase a partial share of a property. In practice, all heirs usually sign together, or one heir buys out the others.
It depends mostly on how ready the title is. If the property still needs to be transferred into the heirs' names, the full process often takes 6 to 12 months from start to money abroad.
You can use its fair market value as on 1 April 2001 as the cost, supported by a registered valuer's report. This often reduces the capital gains tax significantly.
For inherited property, the rules are largely the same. What changed from 1 April 2026 is the numbering: for example, the 2001 valuation is now under Section 90, the exemptions under Sections 82, 85 and 86, and the lower TDS certificate is Form 128 instead of Form 13.
Possibly on the same gain, but India's tax treaties (DTAA, now Section 159) usually let you claim credit for tax paid in India. The details depend on your country, so it is worth planning before the sale.
Keep reading
More free guides for NRIs selling property in India.
From legal heirs and title transfer to the 2001 valuation, Form 128 (earlier Form 13) and repatriation, we handle the entire process for NRI families, end to end. Schedule a free consultation and we will map out your situation.