You pay no tax in India on inheriting a flat or land, wherever you live. Tax arises when the property earns rent or is sold, and a long-term gain on a sale is taxed at 12.5 per cent plus surcharge and cess.

If you are not resident in India in the tax year you sell, the buyer must deduct tax before paying you, however small the sale, and is liable for any shortfall. The buyer can end up deducting more than the tax you owe on your gain, so apply for a Form 128 certificate from the Assessing Officer as soon as the buyer and the price are agreed, and before the buyer pays you.

Where this page sits

A buyer's lawyer will look for the property in your name in the record before a sale, and our guide to transferring inherited property from abroad sets out the steps.

Related guides:

• How the buyer deducts and files the TDS
• Inheriting property as an OCI or foreign citizen
• Succession certificate for an NRI, which covers only debts and securities, such as bank deposits and shares

Do NRIs Pay Inheritance Tax in India?

There is no inheritance tax in India for an NRI, an OCI cardholder or anyone else, and no estate duty: the Estate Duty Act, 1953 was repealed by Act 20 of 2000. Under section 92(3)(c) of the Income-tax Act, 2025, property received under a will or by inheritance is not taxed as income, whatever the heir's residence. Under the FEMA (Non-debt Instruments) Rules, 2019, an NRI or OCI may inherit any immovable property in India, agricultural land, a farm house and plantation property included.

How Is the Sale of Inherited Property Taxed?

You pay tax on the capital gain, and the previous owner's years and cost count as yours. If your parent bought the flat, you count the years they owned it and start from the price they paid; if land came down two generations, you count from whoever last bought it. Land or a building is long-term once it has been held for more than 24 months in all, and a long-term gain is taxed at 12.5 per cent before surcharge and cess.

Improvements are added to the cost, and sale expenses such as brokerage come off the sale price. For property the previous owner acquired before 1 April 2001, you may use its fair market value on 1 April 2001, capped at its stamp duty value on that date. Where the previous owner's cost cannot be found, you use the fair market value when that owner acquired it. Heirs who own the property in definite shares are each taxed on their own share.

If you are non-resident in the year of sale, you pay 12.5 per cent without indexation, and you cannot set any unused basic exemption against the gain. The rule that caps the tax at what 20 per cent with indexation would produce, for land or a building acquired before 23 July 2024, applies only to a resident individual or Hindu undivided family.

Rural agricultural land is not a capital asset, so selling it produces no capital gain in India. Farmland is a capital asset only inside a municipality, municipal corporation or cantonment of at least 10,000 people, or within 2 to 8 km of its limits, depending on the population. If you are selling rural farmland, ask a chartered accountant whether the buyer should deduct tax before you agree the sale.

How Much Tax Will the Buyer Deduct When You Sell?

On a long-term gain, the buyer deducts 12.5 per cent under section 393(2) of the Income-tax Act, 2025, plus surcharge and a 4 per cent cess: 13 per cent in all where the income subject to deduction is up to Rs 50 lakh, 14.3 per cent above Rs 50 lakh, and 14.95 per cent above Rs 1 crore.

Section 393(2) makes the buyer deduct tax on any sum paid to you that is chargeable to tax, and a buyer who deducts too little is treated as an assessee in default. There is no minimum for a seller who is not resident, so the buyer deducts on a sale of any size. The deduction is limited to the chargeable part, such as your gain, only once the Assessing Officer has determined that part on the buyer's application under section 395(2).

Say your parent bought a flat for Rs 20 lakh and you sell it for Rs 1 crore, with no improvements and no sale expenses, so your gain is Rs 80 lakh. If the deduction is worked on that gain, the tax at 12.5 per cent is Rs 10 lakh, the 10 per cent surcharge adds Rs 1 lakh because the gain exceeds Rs 50 lakh, and the 4 per cent cess on Rs 11 lakh adds Rs 44,000. The total is Rs 11.44 lakh, which is 14.3 per cent of the gain.

Give the buyer a valid PAN. Without one, the buyer deducts at the higher of the rate in force and 20 per cent, unless you give the buyer your tax residency certificate, the tax identification number of your country of residence, and your e-mail, phone number and address abroad.

Under section 395(1), you can apply to the Assessing Officer for a certificate fixing a lower or nil rate of deduction, and while it is valid the buyer must deduct at that rate. You apply in Form No. 128 (earlier Form 13) on TRACES, with your PAN. The certificate names the buyer and is valid for a specified payment up to its amount, so apply once the buyer and the price are agreed. Tax deducted beyond what you owe comes back only when you claim it in an Indian income-tax return.

Does the Buyer Still Need a TAN?

A resident individual or Hindu undivided family buying property from an NRI has not needed a Tax Deduction and Collection Account Number (TAN) since 1 October 2026, under the Finance Act, 2026. Such a buyer still deducts the tax, files Form 141 Schedule E from their own PAN login, and pays the tax within 30 days from the end of the month of deduction. Companies, firms and non-resident buyers still need a TAN.

What Tax Is Due If You Rent Out the Inherited Property?

Rent is taxed as income from house property: the taxable amount is the annual value, less the municipal taxes you paid in the year, less a flat 30 per cent, and less interest on a loan for the property. A tenant paying rent to an NRI deducts tax at 30 per cent plus surcharge and cess with no threshold, and needs a TAN for it. You can apply in Form 128 for a lower rate on the rent as well. The annual value is nil if you live in the house or cannot live in it for any reason, for up to two houses you choose, provided you let no part of them in the year.

How Can You Reduce the Capital Gains Tax?

If you plan to buy or build a house in India, reinvest in it under section 82, or under section 86 if what you sold was not a house, such as a plot or a shop. The bonds under section 85 need no house purchase and can take up to Rs 50 lakh of the gain out of tax.

Section 82 exempts the long-term gain on a residential house, up to the cost of another house in India that you buy within one year before or two years after the sale, or build within three years; any cost above Rs 10 crore is ignored. Deposit any money not yet spent in the notified scheme at a specified bank before the due date of your return. If you sell the new house within three years, the gain exempted here is taxed on that sale. There is no residence condition, so an NRI can use it.

Section 85 exempts the part of a long-term gain on land or a building that you invest within six months, up to Rs 50 lakh, in bonds of the National Highways Authority of India, the Rural Electrification Corporation or other bonds the Government notifies. The bonds are redeemable after five years, and the exemption stands only if you hold them that long.

For a plot, a shop or any other long-term asset that is not a house, section 86 exempts the gain in proportion to the net sale consideration you put into one residential house in India, on the same time limits as section 82, provided you own no more than one other house on the date of sale.

How Do You Send the Sale Money Abroad?

You send the money from selling inherited property in India through your bank, up to USD 1 million in each financial year, after the applicable Indian taxes are paid. The Reserve Bank's Master Direction on Remittance of Assets allows this to an NRI or a Person of Indian Origin, OCI cardholders included, from Non-Resident Ordinary (NRO) balances, sale proceeds or inherited assets, on documentary evidence. Within the same limit, the bank may instead transfer the money from your NRO account to your Non-Resident External (NRE) account.

Use the same bank for every instalment; remitting above USD 1 million needs the Reserve Bank's prior approval. The bank may ask for Form No. 145, the declaration filed before money is remitted to a non-resident, and Form No. 146, a chartered accountant's certificate.

A sale in a tax year that began before 1 April 2026 is still dealt with under the 1961 Act. For a later sale, your bank and your accountant use the new names:

Will the Country You Live In Tax the Sale Too?

Your country of residence may also tax the gain under its own law. Under India's treaties with the UK, the US and the UAE, it gives relief for the Indian tax, subject to its own law; anywhere else, check how it treats Indian tax. To claim treaty relief in India, you need a tax residency certificate and Form 41 (earlier 10F).

What Should an NRI Do When Selling Inherited Property?

Get the property into your name first, and apply for a Form 128 certificate before the buyer pays you. Take these steps in order:

1. Get the property recorded in your name.
2. Give the buyer a valid PAN, and get one first if you do not have it.
3. Once the buyer and the price are agreed, apply in Form 128 on TRACES for a lower or nil deduction, before the buyer pays you.
4. If you plan to reinvest, check the time limits in sections 82, 85 and 86 before you sign the sale.
5. Send the money abroad through one bank, with Forms 145 and 146 if the bank asks for them.
6. Claim any tax deducted beyond what you owe in an Indian income-tax return.

Once the property is yours, you can decide who receives it after you by making a will, and our guide to an Indian will for your Indian assets explains how an NRI makes one from abroad.

FAQs

Is property inherited by an NRI taxable in India?

An NRI pays no tax in India on receiving property under a will or by inheritance, because section 92(3)(c) of the Income-tax Act, 2025 does not treat it as income. Tax arises later, on rent and on a sale.

Is there inheritance tax in India for OCI cardholders?

An OCI cardholder pays no inheritance tax or estate duty on property received in India, because India has neither: the Estate Duty Act, 1953 was repealed by Act 20 of 2000.

What replaced Form 13, Form 15CA and Form 15CB?

Form 13 is now Form 128, Form 15CA is now Form 145 and Form 15CB is now Form 146, and a bank or accountant uses the new names.

Who can an NRI sell inherited farmland to?

Under the FEMA (Non-debt Instruments) Rules, 2019, inherited farmland, a farm house or plantation property may be sold only to a person resident in India, with no citizenship condition. State land laws may restrict the buyer further.