Inheritance is 100% tax-free in India for NRIs, OCIs, and US citizens, meaning there is no inheritance tax in India for NRI, no inheritance tax in India for OCI, and no inheritance tax in India for US citizens. Neither the receiver nor the transferor pays tax at the time of inheritance. However, capital gains tax applies if the inherited property, shares, or other assets are sold. Repatriation of such proceeds is possible up to USD 1 million per financial year. US citizens also need to follow inheritance tax USA rules, which makes inheritance tax planning for NRIs in India very important in 2025.
At Capital Gurukul, we make these complex rules simple. Let’s break it all down.
What is the Current Status of Inheritance Tax in India for NRI, OCI, and US Citizens?
- No Inheritance Tax in India – There is no inheritance tax in India for anyone, including NRIs, OCIs, or US citizens.
- Why Was Inheritance Tax Abolished in India? The tax was abolished in 1985 because the rates were as high as 85% and cost of collection was greater than the revenue earned.
- Who Can Inherit? Any NRI, OCI, or US citizen can inherit property, shares, gold, or other assets from India.
👉 In short: receiving an inheritance is tax-free. Tax only comes into play when you sell the inherited property.
What Happens After You Inherit?
1. Income from Inherited Assets
- If you inherit a house and rent it out, the rental income is taxable in India.
- If you inherit fixed deposits, bonds, or shares, the interest or dividends are also taxable in India.
2. On Selling Inherited Assets
- Selling property, shares, or gold leads to capital gains tax.
- Long-term capital gains apply if property is held for more than 24–36 months.
- NRIs can claim indexation benefits to reduce tax burden.
- To save further, learn how to avoid capital gains tax on sale of inherited property through exemptions and reinvestment strategies.
How to Transfer Inheritance Money from India to USA
This is one of the most common concerns for NRIs, OCIs, and especially US citizens.
- Step 1: Sale proceeds must first be credited to your NRO account.
- Step 2: You can repatriate up to USD 1 million per financial year under RBI rules.
- Step 3: For larger transfers, RBI approval is required.
- Step 4: File Form 15CA and 15CB with your bank for tax compliance.
- Step 5: Keep proper documentation – inheritance proof, sale deed, and bank details.
🚫 Restrictions: Proceeds from agricultural land, farmhouses, and plantation properties cannot be sent abroad.
This makes it crucial to know exactly how to transfer inheritance money from India to USA without mistakes.
US Citizen Inheriting Property in India – Double Rules Apply
A US citizen inheriting property in India faces two tax regimes:
- India’s rules – No inheritance tax, but capital gains tax on sale.
- US rules – Inheritance tax USA may apply on worldwide assets depending on estate value.
⚠️ This means double reporting and possibly double taxation if you are not careful. Using the Double Tax Avoidance Agreement (DTAA) and proper tax planning is a must.
Why Inheritance Tax Planning for NRIs in India is Essential
Without proper planning, NRIs and US citizens may:
- Pay higher capital gains tax due to poor timing of sale.
- Face double taxation in both India and USA.
- Lose repatriation rights if documents are incomplete.
- Miss exemptions due to lack of knowledge.
Best practices include:
- Using indexation for lower taxable gains.
- Reinvesting in eligible assets for exemptions.
- Planning repatriation in financial year cycles.
- Setting up family trusts for smooth transfers.
At Capital Gurukul, we guide global families on inheritance tax planning for NRIs in India, making sure your wealth is preserved across borders.
Latest Updates & Must-Know Facts for 2025
- India has no plans to bring back inheritance tax as of 2025.
- NRIs/OCIs can repatriate up to USD 1 million yearly.
- US citizens must factor in inheritance tax USA rules alongside Indian tax rules.
- Banks in India now offer specialized NRI inheritance services.
- Must-try strategies: DTAA usage, power of attorney for overseas heirs, and expert planning.
Why Choose Capital Gurukul?
- We are superior to others because we don’t just explain the law—we make sure you apply it in the most profitable way.
- We help NRIs, OCIs, and US citizens with inheritance tax planning, capital gains optimization, and repatriation compliance.
- We also provide courses in finance, trading, and investment so you never make costly mistakes.
- Many families lose money because they don’t know these rules. With us, you won’t.
Final Word
There is no inheritance tax in India for NRI, no inheritance tax in India for OCI, and no inheritance tax in India for US citizens. But the real challenge comes in handling capital gains, repatriation, and inheritance tax USA obligations. That’s where Capital Gurukul makes all the difference.
Don’t risk losing your wealth due to poor planning.
🚀 Ready to Secure Your Financial Future?
Open your Demat Account with Capital Gurukul and get expert support in trading, inheritance planning, and wealth building.