NRIs Inheriting Property in India

by | Aug 20, 2020 | Indian Law, NRI Legal Services, Real Estate, Wills, Probate & Trusts

Every year a large number of Indians based outside of India inherit, buy and sell property in India. Whether you are a Non-Resident Indian (NRI), an Overseas Citizen of India (OCI) or a Person of Indian Origin (PIO), without proper guidance, transferring Indian property may prove to be a confusing and time-consuming process. This guide is aimed at improving your understanding regarding Wills and Succession Certificates under Indian Law if you are an NRI or a PIO/OCI.

If you are an NRI who may or has already inherited property in India, our post about NRI Power of Attorney’s may be a useful read.

Table of Contents

  1. Can NRIs inherit a property in India?
  2. What is the Indian Succession Act 1925?
  3. What is intestate succession under Indian Law?
  4. Is the location of the property relevant?
  5. What is the Hindu Succession Act and how does it work?
  6. What is Will?
  7. Who can make a Will?
  8. What can be willed?
  9. Can a Will be revoked or altered after its made?
  10. How is a Will executed under Indian Law?
  11. Who are legatees?
  12. Who are executors?
  13. What should be included in a Will?
  14. What is a Codocil?
  15. What are the grounds for challenging a Will?
  16. How much does Will cost?
  17. How do you register a Will in India?
  18. Can I deposit my Will for safekeeping?
  19. What is a Probate?
  20. What is the procedure for challenging a Will?
  21. How can a Will be challenged after probate?
  22. What are the rules governing the transfer of a property through a Will under Indian Law?
  23. What is the process of revocation of a will?
  24. What is a Letter of Administration?
  25. What is a succession certificate under Indian Law?
  26. What is the difference between a Succession Certificate and a Legal Heir Certificate?
  27. How long does it take to obtain a Succession Certificate in India?
  28. When can a Succession Certificate NOT be granted?
  29. What information is required to apply for a succession certificate?
  30. Validity of Succession Certificate
  31. Can a Succession Certificate be revoked?
  32. What are the other methods of transferring property when the person is alive?

NRI Property india

1. Can a Non-Resident Indian inherit a property in India?

A Non-Resident Indian can inherit the property from anyone including his relatives. The NRI can inherit property in India even from another NRI, subject to certain conditions. An NRI or any person of Indian origin, can inherit any immovable property (such as land or buildings) in India, whether it is residential or commercial. They can even inherit agricultural land or a farmhouse, which they are otherwise not entitled to acquire by way of purchase.

2. What is the Indian Succession Act 1925?

The Indian Succession Act came into operation on 30th September 1925 and it seeks to consolidate all Indian Laws relating to succession. It is applicable both to intestate succession (where property passes in absence of a will) and testamentary succession (where there is a will and property is distributed as per that will). An important point to note is that it has no retrospective operation. 

Along with the Indian Succession Act 1925, the Hindu Succession Act, 1956 and Mohammedan Law govern provide the framework for succession in particular cases. 

These laws provide for the manner of devolution of the properties of the deceased who has died without making a Will, amongst his legal heirs. 

They provide amongst other things, rules as to who are the persons entitled to receive the estate of the deceased and in what proportion. They also lay down the manner in which the estate of the deceased is to be administered.

3. What is intestate succession under Indian Law?

In case of a person who dies without making a Will, the property passes by inheritance as per the personal law of the deceased. Devolution of property of such a person after his death is known as ‘Intestate’ succession. In such cases, the individual is required to apply for a Succession Certificate (more on succession certificates below).

4. Is the location of property relevant?

For purposes of determining applicability of laws in case of a succession, it is necessary to determine the domicile of the deceased. In case of an immovable property located in India, the laws of succession prevailing in India would determine the successors of such property. In case of movable properties, the laws governing the country of domicile of the deceased would determine the successors of the property. Domicile is relevant for movable properties while location is relevant for immovable property.

5. What is the Hindu Succession Act 1956 and how does it work?

Hindu Succession Act, 1956, applies to persons of Hindu/Sikh/Jain/Buddhist faiths. A distinction is made between a male and a female for the purposes of deciding the manner of distribution of their estates. 

Heirs are defined as class I, class II, Agnates and Cognates for a male Hindu while for female they are provided in S. 15 and S. 16 of the Act.

Male : His property devolves upon his widow, children (including heirs of a predeceased child through such child) and mother in equal shares – each taking one share. In case where none of them are present, the property will pass to his father if he is alive and failing which to his brother, sister and other relatives specified in class II.

Female : Her property devolves upon her husband and children (including children of a predeceased child through such child) in equal shares — each taking one share. In case where none of them are present, property will pass to heirs of her husband and failing them to her mother and father, so however, a distinction is made in such a case between the properties received from the parents of the female and those which are received from the husband and the father-in-law. The latter property will pass to heirs of her husband while the former will pass upon the heirs of her father.

Others – Properties of persons following any faith other than the Hindus, Jains, Sikhs, Buddhists and Mohammedans and Parsis shall devolve as per the provisions of the Indian Succession Act.

6. What is a Will and what do I need to know about it?

Understanding how Will work in India is vital for NRIs inheriting property there. Please familiarise yourself with some important terms concerning a will:

  • ‘Testator’ : a person making a Will.
  • Legatee or beneficiary : a person to whom property is given under the Will.
  • Legacy : a benefit under the Will.
  • Executor : a person appointed by the testator to execute the Will as per the provisions of the Will.
  • Attestation : an act of witnessing the execution of the Will.
  • Administrator : a person appointed by a competent authority to administer the estate when no executor is appointed or an executor appointed refuses to act as an executor.
  • Probate : a copy of a Will certified under the seal of a Court of competent jurisdiction with a grant of administration to the estate.
  • Codicil : a separate document which modifies or alters the provisions of the original Will and forms part of it, made by the testator during his lifetime.
  • Letter of Administration : a letter of the court appointing an administrator to the estate.
  • Succession Certificate : as issued by a Civil Court of competent jurisdiction in respect of the property of a person who has died intestate, that is without making a Will and where letter of administration or probate is not compulsory.

7. Who can make a Will?

Section 59 of the Indian Succession Act provides that every person of sound mind not being a minor may dispose of his property by a Will. Persons who are deaf, dumb, blind and even an insane person during his sanity can make a Will. However, any person in an improper state of mind due to intoxication, illness, etc. cannot make a Will where he does not know what he is doing. Subsequent incapacity will not invalidate a Will.

8. What can be willed?

Properties which are self acquired can be disposed of under a Will. Properties acquired by inheritance or gift, etc. and held exclusively can also be subject matter of Will. 

It is also possible for a member of a Hindu Undivided Family (an Hindu Undivided Family is a family which consists of all persons lineally descended from a common ancestor and includes their wives and unmarried daughters. Jain and Sikh families even though are not governed by the Hindu Law, but they are treated as HUF under the Act)  to transfer his share in the properties of HUF under Will. 

9. Can a Will be revoked or altered after its made?

A Will can be revoked at any time by the testator during his life. A Will as per Section 69 of the Indian Succession Act is revoked on the marriage of the testator. This rule, however, does not apply to a Will made by a Hindu or a Muslim. It is possible to alter a Will by a codicil or by correcting the original Will itself as per S. 71 of the Indian Succession Act which takes effect only if alterations were executed in the same manner as a Will was executed.

10. How is a Will executed under Indian Law?

A Will should be executed by the testator by signing or putting his/her mark on Will in a manner so as to clarify his intent. The act of execution by the testator should be witnessed by at least two persons acting as attesting witnesses (who are not family members or beneficiaries of the testator, who must sign or put their marks in the presence of the testator. It is preferable that the signature is placed at the end of the Will. 

Subject to the Will being made by a competent person in writing, executed by testator and attested by at least two witnesses no other legal requisites are provided for in the Indian Succession Act.

Even a vaild Will made outside in India can be admitted for probate in India for the purpose of transferring Indian Property or proving a legal right in a property. It is important to note that if there is a dispute amongst legal heirs in a court of law, you may need to prove the validity of the Will. One of the ways of achieving is the witnesses (to the Will) may be required to provide a witness statement in support of its validity in a Court of Law.

11. Who can be legatees?

A testator can give his estate or part thereof to any person, whether born or unborn (subject to rule against perpetuity where ultimate legatee is preceded by a vesting in a living person), of his choice Estate can be given under a Will to trusts, organisations, etc. also. 

An executor appointed for administration can also be a beneficiary under a Will. A bequest to a non existent person fails. However, where it was made in favour of a person who is dead at the time of the death of the testator, estate will devolve on the legal heirs of dead person.

12. Who are the executors?

An executor is a person entrusted with the duty to carry out instructions of the testator and has the power to collect, realise and distribute the estate of the deceased. 

There is no restrictions on number of executors but their number should be restricted to four considering the court practice. Unless otherwise empowered an executor has to invest the realised estate as per the provisions of Indian Trust Act and is also not entitled to any remuneration. On refusal of the appointed person to act as an executor, the competent court is authorised to appoint any appropriate person.

13. What should be included in a will?

In a will the following details are to be included:

  1. Testator details – The name, age, address and other details which shall help in identifying who is making the will and when is it being drawn.
  2. Sound mind declaration – It is very important that the testator declares that he/she is of sound mind and free of any coercion while drawing the will.
  3. Beneficiary details – The details of who shall be benefitting out of this will and to whom shall the assets be divided should be given as their name, age, address and relation to the testator. 
  4. Executor – It is very important to appoint an executor who would ensure that the will is carried out according to the directions provided by the testator. The name, age, address and relation to the testator should be specified as well.
  5. Property and asset details – It is pertinent to list out all the details of the assets and properties that a testator has, and which are the ones that shall be covered in the will. He/she can also list out any specific assets that are there.
  6. Division of share – The share that each beneficiary has on the property or the specifics of who shall get what is to be listed in full detail. If the asset is to be given to a minor, then a custodian for the minor should also be listed in the will.  
  7. Specific Directions – The testator should give directions in terms of executing the Will and should specify if there are any instructions 
  8. Witnesses – There should be a signature by the testator in the presence of at least 2 witnesses. The witnesses do not need to know the details of the will they just have to verify that the signature by the testator was done before them.
  9. Signature – The testator should sign with the date on the will after the last statement.

14. What is a Codicil?

A Will can be changed by the testator during his life time either by making a new Will after revoking an old Will or by amending the old Will by separate instrument made with the intention to make such an instrument a part of it. 

This new instrument is known as Codicil. S. 2(d) of the Indian Succession Act defines a Codocil as an instrument made in relation to a Will and explaining, altering or adding to its dispositions which shall be deemed to form part of the Will.

15. What are the grounds for challenging a will?

The onus of proving the will is on the propounder and in the absence of suspicious circumstances surrounding the execution of the will, proof of testamentary capacity and proof of the signature of the testator, as required by law, is sufficient to discharge the onus. Where, however, there are suspicious circumstances, the onus is on the propounder to explain all legitimate suspicions to the satisfaction of the court before it accepts the Will as genuine. [Meenakshiammal (dead) through L. ₹v. Chandrsekaran & Another (2005) 1 SCC 280].

A will can be challenged on the following grounds:

  1. Improper execution- If the signature of the testator along with those of the two witnesses are not present then it can be a ground to challenge the validity of the Will.
  2. Presence of coercion, fraud or undue influence- There needs to be a presence of these elements to establish that the Will was not drawn with a clear intention and the testator was under pressure.
  3. Absence of testamentary intention or capacity- This means that the Will may not depict an intention on behalf of the testator to carry out the Will or execute it. Lack of testamentary capacity implies that the testator might not be of sound and reasonable mind while drawing the Will.
  4. Presence of a suspicious nature- There may be a presence of certain elements in the Will which could give a reasonable understanding that there was some transgression with it.
  5. Absence of knowledge- If the testator did not have knowledge of signing the Will then it can be taken to be grounds for challenging the validity of the Will.

For more complex situations, we recommend that you seek legal advice from a qualified professional. Contact a member of our team today for a free assessment of your case.

16. How much does it costs to make a Will?

The cost of making a Will varies from country to country. below is a breakdown of costs to draft a Will in India:

  • Stamp duty — No stamp duty is payable on execution of a Will. A Will can be made on a plain paper.
  • Lawyer – Legal services may vary depending on the seniority of the lawyer
  • Registration in India – INR 100

If you are making a Will outside of India then extra costs such as Indian High Commission attestation fees should be taken into account.

17. How do I register a Will in India?

Registration grants protection and secrecy to a Will. Registration of a Will is optional. If desired it can be registered with the Sub-Registrar of Assurance’s office as per the provisions of S. 40 of the Indian Registration Act. 

A revocation of a registered Will should be registered. It is preferable to register Wills made subsequent to a registered Will. 

18. Can I deposit my Will for safekeeping?

Will can be deposited at option of the testator with any person of his choice including Sub-Registrar of Assurances as per the provisions of S. 42 of Indian Registration Act.

19. What is a probate?

A probate is the grant of administration of the estate by the court of competent jurisdiction on the basis of Will. A probate can be granted only to an executor.

A probate provides the conclusive evidence 

(i) of the execution of a Will 

(ii) of the legacies and 

(iii) of the legal character of legatees by confirming validity of a Will. 

20. What is the procedure for challenging a Will?

In a court of law, under the above-mentioned grounds, a will can be challenged by filing a suit in the civil court in the relevant jurisdiction. Following civil court procedure, proceedings will be initiated and the opposing party will file a written statement in response to the initial claim. Documents such as Legal Heir Certificates amongst others are essential to a case of this nature.

 

21. What are the grounds for challenging a Will after probate?

The following are some grounds for challenging a Will after probate:

  1. If probate was granted by a false allegation of fact
  2. If there was a fraudulent grant of probate by concealing facts or deceiving the court
  3. If the grant of probate has become useless due to certain situational changes
  4. If there was a defect in the proceedings to grant a probate

22. What are the rules governing the transfer of a property through a will under Indian Law?

In the Indian Legal scenario, the laws governing the transfer of property through a will can be seen through these legislations,

  1. The Indian Succession Act, 1925
  2. The Code of Civil Procedure, 1908
  3. The Registration Act, 1908
  4. The Indian Stamp Act, 1899

23. What is the process of revocation of a will?

The process of revocation means the cancellation of a will. This can be done in the following ways:

  1. If there is an execution of a subsequent will the previous will automatically be revoked
  2. If there is a declaration of intention to revoke the will by the testator in written then it can be taken to uphold the new will and revoke the previous one
  3. If the will cannot be found after the death of the testator and was last seen in his possession, then it shall be presumed to be destroyed.
  4. Destroying the existing will by tearing, burning or by other means by the testator. This means that the testator has shown the intent of destroying the will through action. 
  5. If the testator gets married after the will then the old will shall be deemed to be revoked. This is an important principle under the Indian Succession Act and is done to safeguard the interests of all the relevant parties.

24. What is a Letter of Administration?

A letter of administration can be obtained from the court of competent jurisdiction in cases where the testator had failed to appoint an executor under a Will or where the executor appointed under a Will refuses to act or where he has died before or after proving the Will but before administration of the estate.

25. What is a Succession Certificate under Indian Law?

A will is not the only instrument through which NRIs may inherit a property in India. A Succession Certificate is a document which is issued by the court for claiming movable properties by the successors of the deceased.

A succession certificate, under the Indian Succession Act, is a document that gives authority to the person who obtains it, to represent the deceased for the purpose of collecting debts and securities due to him or payable in his name. 

A succession certificate is the key in the absence of a will as it will be the primary document through which the heirs can stake a claim to the assets of a deceased relative to which they are entitled. 

Succession Certificate is a document which is issued by the court for claiming ‘movable’ properties (such as bank accounts or financial investments) by the successors of the deceased. Mostly Banks dont release funds or Fixed Deposits without a document of this type granted to the successor.  

It establishes the legitimacy of the heirs and gives them the authority to get the deposits and other assets transferred in their names. It is issued by the applicable laws of inheritance on an application filed by the beneficiaries in a court of relevant jurisdiction. 

In the case of ‘immoveable’ properties (such as land or buildings) legal heirs stake ownership of title and possession. The title of a property can be transferred through a systematic process of transfer which can be based or done through a Will or Law of Natural Succession where class I legal heirs are the inheritors. 

All that the succession certificate purports to do is to facilitate the collection of debts, to regulate the administration of succession and to protect persons who deal with the alleged representatives of the deceased persons. Such a certificate does not give any general power of administration on the estate of the deceased. The grant of a certificate does not establish title of the grantee as the heir of the deceased. 

Contrary to popular opinion, a legal heir certificate and a succession certificate are different. 

A succession certificate is required in instances where a family member passes away and the next direct legal heir of the deceased is his wife/husband/son/daughter/mother. This certificate can be used for the purpose of paying certain taxes and accounts. 

In contrast to a succession certificate, a legal heir certificate is required if a Government official has passed away, in order to claim a family pension, insurance, retirement claims, etc. 

27. How long does it take to obtain a Succession Certificate in India?

Usually to obtain a succession certificate the court issues a notice in the newspaper for atleast 45 days. This gives an opportunity to any individual who may have a claim to approach the court and file a claim or if even if they have any objections. If the court does not receive any objections, it will issue the succession certificate. This process may take up to 6-7 months.

28. When can a Succession Certificate NOT be granted?

As per Section 370 of Indian Succession Act, when the deceased person has left a validly executed Will , the entire estate of the deceased person under that will vests on the executor of the will and in such cases Succession Certificate cannot be granted. In eligible cases, the competent court to issue such certificate is the District Court(Section 371 of the said Act) in whose jurisdiction the deceased person generally resided. 

29. What information is required to apply for a succession certificate?

Simply having knowledge of property that you are entitled to inherit is not enough to prove your claim. The appropriate documentation is needed to assert the claim. It is advisable to obtain the proper advice from experienced lawyers. 

The following information and documentation is required whilst applying for a succession certificate:

  1. The time of the death of the deceased, or the Death Certificate as proof.
  2. Place of residence of the dead person or if such residence is not within the jurisdiction of the district judge then, any other property of the same individual falling under the purview of the district judge to whom the application is made.
  3. The details of the family and other kith and kin of the deceased and their residential addresses. 
  4. Proof of what right or what capacity he should be nominated as the successor of the departed. 
  5. Sufficient evidence that the said asset does not fall under the restrictive cases and there is no dispute to his claim as a successor. 
  6. Complete details of any debt or security attached.

30. Validity of Succession Certificate

Certificate A succession certificate has validity throughout India. If a certificate is granted in a foreign country by an Indian representation accredited to that State, it should be stamped in accordance with the Court Fees Act 1870 to have the same effect in India as a certificate granted in India. 

31. Can a Succession Certificate be revoked?

Revocation of the Succession Certificate As per Section 383 of the said Act, a certificate so issued may be revoked for any of the following causes:- Process for obtaining the certificate was defective. Certificate was obtained fraudulently. Certificate becomes useless and inoperative due to circumstances. Decree or order of other competent court in dealing with the debts and securities of the same deceased person, renders it proper that the certificate is revoked. Against an order of the District judge, in the matter of grant, refusal or revocation of certificate, a person may appeal to the appropriate High Court. 

32. What are the other methods of transferring property when the person is alive?

A transfer can take place when the person is alive through a Gift Deed. In other cases, a person can claim his right through a partition. 

If you are looking to transfer property in India, we recommend that you seek professional legal advice.

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Frequently asked questions

How does inheritance of property work in India?

Indian law concerning Hindus is very clear that in absence of a valid Will, a self-acquired property of the deceased male/female Hindu is inherited by their sons and daughters in equal shares along with the surviving spouse.

Is inherited property taxable in India?

Inheritance or Estate Tax was abolished with effect from 1985. When a person inherits ancestral property, no tax liability arises at the time of inheritance. However other taxes may apply, such as income tax on the income received from the property or capital gains tax on the sale of the property.

Do I pay tax on the sale of inherited property?

Tax is payable only if the inherited property is sold, i.e. capital gains tax.

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