Inheritance tax in India: What you need to know

Are you expecting to receive an inheritance from a relative living in India? Or perhaps you’re a UK expat who has retired to India, and are in the process of organising your affairs for later life.

In either circumstance, it’s useful to know a little about how Indian inheritance law works - especially in relation to taxes.

So read on for a complete guide to inheritance tax in India, covering everything you need to know. We’ll look at who pays inheritance tax in the country, along with rates, exemptions, calculations and much more.

We’ll also show you how to send large amounts of money securely between countries using the Wise Account. This can be extremely useful if you have inheritance tax to pay, or want to send money from an inheritance in India back to the UK.

Learn more about the Wise account

What is inheritance tax?

Inheritance tax, known as IHT in the UK, is a tax paid to the government on the estate of someone who has died. The ‘estate’ usually encompasses all property and possessions, as well as savings, investments and pensions.

Many countries have inheritance tax systems. Depending where in the world you are, the tax may be known as estate tax, inheritance tax or succession tax.

However, some countries don’t have inheritance tax policies at all. This includes the likes of Portugal, Australia, New Zealand, Singapore, Hong Kong, Mexico, Estonia, Slovakia and Canada.¹

And as we’ll discover in just a moment, this list also includes India.

Inheritance tax in India

There is no inheritance tax in India. The country doesn’t have a system for charging inheritance tax on the transfer of estates from a deceased person to their heirs. ²

The Indian Revenue Service (IRS) also doesn’t levy anything similar to inheritance tax, such as estate duties, gift duties, stamp duty or death duties.

This makes it unlike the UK, where inheritance tax is due on estates valued over a certain sum.

It wasn’t always this way in India though. The country did use to charge inheritance tax through the Estate Duty Act of 1953, but both inheritance and estate taxes were abolished back in 1985.³

However, there may still be some indirect taxes to pay in relation to inheritance, especially when it comes to real estate. For example, you may have to pay income tax on any rental income you receive from a property you inherit. Or if you sell a property you’ve inherited and make a profit on it, you may have to pay capital gains tax.

Who pays inheritance tax in India?

In countries which do have an inheritance tax system, it is either the estate that is liable for the tax, or each individual beneficiary.

In the UK, for example, the tax is paid as a lump sum by the estate before inheritances are distributed to the beneficiaries. But over in some European countries like France and Spain, each beneficiary needs to pay inheritance tax if they inherit more than a designated personal tax-free allowance.

It’s completely different in India, as neither the beneficiary or the estate have any inheritance tax or stamp duty to pay.

However, it may still be a good idea to double check that no inheritance tax is due in another country. For example, you might have inherited property held in the UK from a relative who was an Indian citizen. No tax is due in India, but the UK may charge tax of some kind on the transfer of property based in the UK.

It’s important to get professional tax advice to double check which country’s tax laws apply to you, especially if you live between countries or have property in multiple countries.

Inheritance tax rates in India

As India doesn’t have inheritance tax, there aren’t any rates, allowances or thresholds to worry about.

There are some situations though where some form of tax may be due.

For example, if you sell real estate property in India that you’ve inherited from the deceased person. In this case, you may be liable to pay capital gains tax on any profit you make.

In India, there are two types of capital gains tax - short term and long term. If a property is held (by the deceased and the inheritor) for less than 24 months, short term capital gains tax (STCG) applies when it is sold. Otherwise, it’s long term capital gains tax (LTCG).⁴

The rates range from 12.5% to 20% depending on your circumstances.⁴ Exemptions may apply if you use the funds from the property sale to invest in other property, under certain conditions. You’ll need to get some professional advice to look into this further.

You may also have to pay income tax if you inherit assets which generate an income. A prime example of this is an apartment that is rented out, which brings in rental income each month. You’ll need to declare any such income you receive to the Indian tax authorities and pay the appropriate amount of income tax due.

Taxable assets and exemptions

As India doesn’t have any inheritance tax laws, it means that all assets within an inherited estate are free from tax.

Crucially though, this may only mean assets held in India. If you inherit assets from another country, you may be liable for inheritance tax under that country’s rules.

To avoid an unexpected tax bill, it could be a good idea to seek professional tax advice.

Steps to claim an inheritance in India from the UK

If you’re living in the UK but are entitled to an inheritance from a deceased relative in India, you’ll need to know how to go about claiming it.

Here are the main steps involved:⁵

1. Appoint a solicitor or other legal representative in India (or specialising in overseas inheritances). They can help you navigate the system for claiming inheritance, including tracking down documents and submitting applications.
2. Gather the required legal documents. This includes copies of the death certificate, the will (if there was one), heir certificates, affidavits and ID documents for yourself as a beneficiary. Your solicitor can help you obtain the documents you need.
3. Apply for a succession certificate. If the deceased person left no will, you’ll need to apply to the district court for a Succession Certificate - this establishes your right as a legal heir to inherit property or assets.
4. Update land/property records. This process is known as mutation of property, or Dakhil-Kharij or Khatauni in Hindi. It involves updating land or property records to reflect change of ownership.
5. Inform HMRC in the UK. If inheritance tax is due in the UK, you’ll need to complete some paperwork to let HMRC know. Find out more about receiving inheritance from abroad here.

Wise - For big money transfers at life’s big moments

After reading this, you should have a better idea of how the Indian inheritance tax system works - and how it applies to you and your family.

The good news is that in most cases, you shouldn’t have to pay inheritance tax if you’re the beneficiary of assets or property from a deceased relative in India. But you may still have other taxes to pay, such as capital gains tax if you sell the property.

In this case, you’ll need a secure, low-cost way to send money over to India from the UK.

Wise is the perfect solution, letting you hold and convert between 40+ currencies in your online account. And you can send money worldwide for low, transparent fees* and mid-market exchange rates.

There’s even a dedicated secure service for sending large amounts.

If you’re sending a large sum between countries, read our quick guide on what documents you’ll need.

Whether you’re paying foreign bills or trying to get the best exchange rates when repatriating funds from overseas back to the UK, your Wise account can do it all.

FAQs about inheritance tax in India

Here are some commonly asked questions about inheritance tax in India:

Can a British citizen inherit property in India?

Yes, British citizens can inherit property and all kinds of other assets from anyone in India, whether a relative, Indian national or somebody else.⁶

What is inheritance tax in India for NRIs?

If you’re an Indian citizen living abroad (a non-resident Indian or NRI) and you come into an inheritance, there are no inheritance taxes to pay in India.⁷

The situation is just the same for NRIs as for foreign beneficiaries living in other countries who inherit assets from a relative living in India.

However, you may still be liable for inheritance taxes in the country you’re living in now. It’s advisable to get professional advice to understand your obligations.

How does inheritance work in India?

In India, assets can be inherited in one of two ways. The first is with a will, which stipulates how assets should be distributed and names beneficiaries. But if there is no will, property is distributed between surviving legal heirs according to India’s laws of succession.

Religion also plays a major part in how inheritance rules are enacted in India. Property may be distributed differently depending on whether the deceased or their family is Hindu, Muslim, Sikh or Christian.

Sources used:

Sources last checked on date: 27-Feb-2025