NRI Estate Planning: FEMA, Wills, and the Repatriation Maze
Most NRI estate planning articles tell you what to do after someone dies. How to claim inherited property, how to handle taxes on it, how to deal with legal paperwork from 8,000 km away. Useful, sure. But also too late.
The best time to sort out NRI estate planning is while everyone’s alive and willing to sit in the same room. The second best time is today.
You’re dealing with two legal systems, two tax regimes, and FEMA regulations that treat you differently depending on whether you bought something or inherited it. Your parents’ will that says “everything goes to my children equally” doesn’t account for the fact that “equally” across borders creates a nightmare of compliance paperwork and repatriation limits.
Which Law Governs Your Property?
Section 5 of the Indian Succession Act lays out a clean rule:
Immovable property in India (apartments, plots, farmland) is always governed by Indian law. Doesn’t matter if you’re a US citizen, UK resident, or Martian. If the property sits in India, Indian succession law applies. Lawyers call this the “lex situs” principle, property follows the law of where it is.
Movable property (bank accounts, shares, mutual funds, gold) is governed by the law of your domicile at death. So if Rajesh is domiciled in California when he passes away, his Indian mutual fund portfolio technically falls under California succession law.
A single will written under US law might handle your American assets perfectly but create complications for your flat in Mumbai. And a will drafted in India won’t cover your 401(k) in New Jersey. This is exactly why the two-will strategy exists.
The Two-Will Strategy
One will for Indian assets, one for assets in your country of residence. Your Indian will deals with the flat in Pune, the FDs in SBI, the ancestral property in Kerala. Your foreign will covers your house in Texas, your brokerage account, your retirement funds. Each goes through its own probate process. Clean separation.
But here’s the trap that catches people. Section 70 of the Indian Succession Act says a later will revokes an earlier one if they’re inconsistent. And most standard will templates include a blanket revocation clause: “I hereby revoke all previous wills and testamentary dispositions.”
Imagine Rajesh makes an Indian will in 2024. In 2025, his estate lawyer in San Francisco drafts a US will with that standard revocation clause. That single sentence just killed his Indian will. When Rajesh dies, his family discovers the Indian property has no valid will, and they’re stuck with intestate succession and years of paperwork.
The fix is straightforward. Each will must explicitly state: “This will applies ONLY to my assets located in [jurisdiction]. It does not revoke any testamentary disposition I have made for assets in any other jurisdiction.”
Have both lawyers review both wills. It takes an extra hour and saves your family years.
For more on writing a valid Indian will, see our detailed guide on wills in India.
FEMA Compliance: What You Can and Can’t Own
FEMA treats purchased property and inherited property very differently. Under FEMA 21(R)/2018-RB, here’s what NRIs need to know:
| Property Type | Can NRI Purchase? | Can NRI Inherit? | Can Sell? | Can Repatriate Proceeds? |
|---|---|---|---|---|
| Residential | Yes | Yes | Yes, to anyone | Yes (max 2 properties, lifetime) |
| Commercial | Yes | Yes | Yes, to anyone | Yes (within USD 1M/year NRO limit) |
| Agricultural land | No | Yes | Only to Indian resident | No |
| Farmhouse | No | Yes | Only to Indian resident | No |
| Plantation | No | Yes | Only to Indian resident | No |
That agricultural land row is the one that bites people. Your parents might own 10 acres of farmland in Karnataka worth ₹2 crore. You can absolutely inherit it. But you can’t sell it to another NRI, and even if you sell it to an Indian resident, you can’t send that money abroad. It stays in India, period.
If your parents own agricultural land and you’re their only child living in the US, your estate plan needs to account for this. Maybe they gift it to a resident relative during their lifetime. Maybe you plan to keep it and earn agricultural income. But ignoring it? That’s not a plan.
The Repatriation Maze
Getting money out of India is the most frustrating part of being an NRI with Indian assets.
NRO account repatriation: USD 1 million per financial year. Covers sale proceeds, rental income, and other legitimate income after tax. Sounds generous until you sell a ₹4 crore apartment and realize you can’t move it all in one year.
Residential property: Maximum 2 properties in your lifetime for repatriation of sale proceeds. Not per year. Lifetime. If your parents left you three flats, you can repatriate proceeds from two. The third stays in India.
Agricultural land: Zero repatriation. Not a rupee. Sale proceeds must stay in India, typically in an NRO account.
The 15CA/15CB Paperwork
Every time you repatriate funds, you’ll deal with Form 15CA (online declaration to the IT department) and Form 15CB (CA certificate confirming the payment is legitimate and taxes are paid).
| Aggregate Remittance (per FY) | What You Need |
|---|---|
| Below ₹5 lakh | Part A of Form 15CA only (no CA certificate) |
| Above ₹5 lakh (no AO certificate) | Form 15CB from CA + Part C of Form 15CA |
Below ₹5 lakh per year, it’s painless. Above that, you need a CA to sign off, which adds ₹5,000 to ₹15,000 per certificate and a few weeks of back-and-forth.
Planning tip: Talk to your CA before selling. Structuring the timing across financial years can reduce paperwork and smooth out TDS credits.
Tax Planning for NRI Property Sales
When an NRI sells inherited property in India, TDS is deducted at source. The rates changed recently:
| Property Acquired | Holding Period > 2 Years | TDS Rate | Indexation |
|---|---|---|---|
| Before July 2024 | Yes (LTCG) | 20% | Yes, available |
| After July 2024 | Yes (LTCG) | 12.5% | No |
Unlike resident Indians, NRIs don’t get to choose between the old regime (20% with indexation) and the new regime (12.5% without). You get whatever applies based on when the property was acquired. For pre-July 2024 properties, indexation often works out better, especially if your parents bought decades ago when prices were a fraction of current values.
DTAA: Avoiding Double Taxation
Your country of residence might also tax the same income. Double Tax Avoidance Agreements (DTAA) help:
| Country | DTAA Method | What It Means |
|---|---|---|
| USA | Foreign Tax Credit | Claim Indian tax paid as credit on US return |
| UK | Credit Method | Claim Indian tax paid as credit on UK return |
| Canada | Credit Method | Claim Indian tax paid as credit on Canadian return |
| UAE | N/A | No personal income tax, so minimal double taxation |
| Singapore | N/A | No personal income tax on foreign income |
You won’t pay tax twice, but you need to file correctly. A cross-border tax advisor is worth every rupee here.
Common NRI Estate Planning Mistakes
1. Not having a will at all. About 80% of Indians don’t have a will. For NRIs, dying intestate means your family navigates succession certificates and legal heir processes from abroad. It’s brutal.
2. The accidental revocation. As discussed above, the blanket revocation clause in a second will kills the first. This alone probably causes more NRI estate problems than any other single mistake.
3. Ignoring FEMA classification changes. Meera’s parents added her as joint owner on their Chennai flat when she was still a resident. She moved to London, became an NRI, nobody updated anything. When her parents died, the joint ownership created FEMA compliance questions that took two years to sort out. Status changes should trigger a review of all property holdings.
4. Not planning for agricultural land. “We’ll deal with the farm later” is not a plan. If you can’t repatriate the proceeds and can’t sell to another NRI, you need a specific strategy for agricultural holdings.
5. Outdated nominations and POAs. Your parents’ bank FDs might still nominate a relative who died in 2015. Their Power of Attorney might name someone who’s now 85 and can’t travel to the bank. Review these every couple of years.
6. Assuming one country’s rules apply everywhere. Your US estate plan doesn’t handle Indian FEMA compliance. Your Indian will doesn’t cover your UK pension. Cross-border estates need cross-border planning.
Frequently Asked Questions
Can an NRI execute a will for Indian property while living abroad? Yes. It should follow Indian Succession Act requirements: in writing, signed by the testator, attested by two witnesses. Get it notarized at an Indian consulate abroad. Registration is optional but strongly recommended.
Do I need probate for an inherited property? In Mumbai, Kolkata, and Chennai (presidency towns), probate is mandatory for wills. Elsewhere it’s not required but highly recommended because most banks and registrars ask for it. No will? You’ll need a succession certificate from court.
What if my parent dies abroad with Indian property? Indian property still follows Indian succession law regardless of where the owner died. We’ve covered the full process in our guide on what happens if you die abroad.
Can I gift Indian property to my children who are also NRIs? Residential and commercial property, yes. Agricultural land can only be transferred to an Indian resident. Gift tax doesn’t apply in India (abolished in 1998), but the recipient might face income tax if the gift exceeds ₹50,000 from a non-relative.
What You Can Do Today
You don’t need to sort everything out in a single weekend. But you can start.
This week: List every Indian asset your family owns. Property, bank accounts, FDs, mutual funds, insurance, gold. If your parents are alive, sit with them and document everything. An app like Anshin makes this simple, you store the details securely and share access with people you trust.
This month: If you don’t have a will, get one drafted. If you already have a will in your country of residence, check for that blanket revocation clause. If it’s there, get it fixed.
This quarter: Talk to a CA about your FEMA compliance. Are your property holdings structured correctly for your current residential status? Are the nominations updated? Is there agricultural land that needs a plan?
The families who handle NRI estate transitions smoothly aren’t lucky. They’re prepared.
Your family shouldn’t have to figure things out during their worst days. Anshin helps you store what matters and share it with the people who need it most.
This information is for educational purposes. Laws and processes vary by state and change over time. For specific legal advice, consult a qualified lawyer.