The legal system of India has its own set of provisions that regulate foreigners’ rights over inheritances. They may be completely different from what you would expect based on your home nation’s laws. Anyone dealing with cross-border inheritance matters or expecting an inheritance from across borders should take some time to get familiarised with these regulations.
In this blog, we will discuss can a foreign citizen inherit property in India and the various associated guidelines that NRIs should be aware of.
Legal Framework for Property Inheritance in India
According to the Indian Succession Act of 1925, rights of succession over properties by foreigners will depend on where the deceased person was domiciled at the time he/she died.
The general rule under this Act is that movable assets should be distributed in line with the law applicable in the jurisdiction recognized by the deceased person’s domicile at death.
In India, the Foreign Exchange Management Act of 1999 governs ownership, including inheritance by NRIs. It differentiates between repatriable investments, which can be taken out of the country again, and non-repatriable ones, which cannot leave India once brought there. It also sets limits on transferring inherited assets.
Foreigners are allowed to inherit land only if it has been legally acquired by their predecessor in title. However, restrictions exist concerning the repatriation of sale proceeds from such properties unless authorised by RBI (Reserve Bank Of India).
Types of Properties and Ownership Rights
In India, under the Foreign Exchange Management Act (FEMA), immovable property refers to land, buildings, or any other type of property that cannot be moved or transported easily. This includes real estate assets such as houses, apartments, commercial buildings, agricultural land, and any other fixed assets that are permanently attached to the land.
Foreign individuals face many limitations when it comes to inheriting property in India, especially in relation to agricultural land, plantations, and farmhouses. Certain legislation, such as the Foreign Exchange Management Act (FEMA) of 1999 and various state laws, normally prohibit foreigners from inheriting any kind of agricultural land.
However, according to FEMA, foreigners are allowed to inherit residential and commercial properties in India, but they cannot do so for agricultural land, plantations, or farmhouses. If a foreigner inherits such property through family connections, he/she is often required by law to dispose of it within specific time limits for an Indian citizen.
Eligibility Criteria for Foreign Citizens
In India, whether or not foreign nationals are allowed to inherit property depends heavily on the citizenship and residency of such individuals. Generally, persons who are not residents can receive property through intestate succession only if they are related by blood to an Indian citizen.
Nonetheless, regardless of their rights of succession over it, non-resident foreigners are forbidden from acquiring agricultural land as well as plantation property or a farmhouse.
This is permitted so long as such inheritance does not contravene any provisions in the Foreign Exchange Management Act (FEMA).
Special Provisions for PIOs and OCIs
As far as the inheritance of property in India is concerned, People of Indian Origin (PIOs) and Overseas Citizens of India (OCIs) are given a slightly better position than other foreigners. Like citizens of India, PIOs and OCIs can inherit any residential or commercial property.
But just as others from foreign countries are not allowed to buy agricultural land, they too cannot acquire such land by way of purchase, although there is no bar on inheriting it. These steps have been taken to promote cultural and economic ties with the Indian diaspora.
Documentation Requirements
To claim inherited property in India, there are multiple crucial documents needed.
These include:
- Death certificate photocopy of the deceased certified by a medical practitioner
- Certificate of legal heir, and the will, if any.
- Identification papers should be provided by the next of kin, which can include a passport for non-citizens.
Equally important are property documents like the original title deed and all transfer deeds related to it, without which legitimacy cannot be established, and a change in possession recognized by law of Indian Property Act must never happen.
Legal Procedures for Documentation Verification
The Indian legal system has a very detailed process for checking if documents are real or not, which is done by closely analysing them to ensure that they are valid in relation to claims of inheritance.
- The death certificate and legal heir certificate should usually be verified by the executor with the help of a legal advisor with the relevant government departments.
- Sometimes there may also involve a will that needs to be probated, meaning it needs to be confirmed as genuine by a court of law.
Tax Implications for Foreign Inheritors
When inheriting property in India, foreign beneficiaries are required to pay income tax. The act of inheriting is not taxed itself, but any earnings resulting from the assets, like rent, must be declared for income taxation. Moreover, if the property gets sold, capital gains tax will also apply.
To benefit foreign inheritors, India has signed Double Taxation Avoidance Agreements (DTAA) with many nations. Such accords guarantee that overseas citizens will not have to pay tax on the same earnings twice in India and their home country.
Depending on the specific accord between the host nation and a particular country, tax credits or exemptions may be applicable under DTAA.
Role of Probate and Will
Having a clear and legally valid will in place is crucial, particularly for foreign nationals. It simplifies the legal processes and ensures that the property is distributed according to the deceased’s wishes.
Probate is the legal process by which the courts validate a will. In India, probate is essential for executing the wishes contained therein, particularly when it pertains to the transfer of immovable property to foreign nationals.
Legal Heirs Under Indian Law
Legal heirs are people who are eligible to inherit a deceased person’s assets and properties under Indian law, even if they are foreigners. This covers parents, spouses, and other immediate family members as well as distant relatives as permitted by law.
How Heirs Are Determined in Absence of a Will
When someone in India dies without leaving a will, their heirs are identified according to the rules of intestate succession, religion being the main determinant of such laws.
For Hindus, Buddhists, Jains, and Sikhs, there is the Hindu Succession Act, which shares out an estate between immediate family members in a certain order; Muslims have Islamic law that prescribes fixed proportions for different categories of relatives; Christians, along with all others, are subject to Indian Succession Act where next-of-kin are given priority over other relations.
Challenges Faced by Foreign Citizens
The Foreign Exchange Management Act (FEMA) and other regulatory laws can be difficult to understand. For example, foreign nationals must follow certain rules which do not affect Indian citizens like getting permission or informing the Reserve Bank of India (RBI).
It takes time and may be confusing because it includes several government levels that are not always clear on what should be done next. Besides this, there are also problems with state legislations concerning estates and occasional requests for bribes from officials which can make things even more complicated for overseas claimants.
The government of India has issued a new guideline to help non-resident Indians inherit property in the country more easily. The move comes after many people living abroad complained about long-drawn legal battles they faced while trying to establish their rights as heirs of assets bequeathed to them.
According to the guidelines, foreign citizens of Indian origin who have inherited property from an Indian relative should approach a lawyer or local authority in the relevant state for assistance in establishing their rights.
The lawyer will then prepare necessary documents such as affidavits and undertake other legal steps required under the law so that the inheritance can be legally recognized by the authorities concerned.
Resolving Disputes on Inheritance
Conflicts may arise in inheritance law from the interpretation of wills, identification of rightful heirs, or management of assets after they have been passed down. Also, settling these matters in court takes a lot of time.
In India’s legal system, solving inheritance disputes is among the most important duties performed by judges who ensure that properties are shared following laws and wishes made by deceased persons.
Claims are evaluated by courts, which interpret testamentary documents. Courts can also enforce equities, enabling fair settlements and thus establishing rightful conduct while discouraging fraud through legal means.
Role of Lawyers and Legal Advisors
For people from other countries, it is very important to find a good legal counsellor. In India, property attorneys provide many different services to foreigners such as giving legal advice, processing documents or representing them in court. These are essential services while dealing with Indian inheritance laws which may seem very complex at times.
At Rustomejee, we understand the unique predicaments you face as an NRI or foreign citizen grappling with property inheritance in India. Rustomjee helps NRI investors to seamlessly invest in luxurious real estate without any worries.
Therefore, do not allow geographical boundaries to become an obstacle to realizing your inheritance rights. Contact us today! At Rustomjee, we simplify things without any complications.
FAQs
- Is it possible for foreigners to buy property in India?
In India, residential and commercial properties may be purchased by foreign citizens from any country apart from Pakistan, Bangladesh, Afghanistan, Sri Lanka, Nepal, China, Iran or those of such origin. However, there is a prohibition on the purchase of agricultural land as well as plantation and farmhouse properties.
- Can a foreign citizen inherit property in India? If yes, can they inherit farmland?
Yes, foreign citizens can inherit property in india. Though they have no right to acquire land meant for farming purposes directly; such people are allowed to do so through inheritance procedures. But then there might be limitations imposed on selling this type of property.
- What is the time frame for transferring inherited property?
The length of this process greatly depends upon various factors like the intricacy involved in settling an estate of someone who has passed away, different types of properties and legal clearances necessary. This could mean anything between a few months up to a year or more.
