Laws of in­her­i­tance

An NRI and PIO can ac­quire any im­mov­able prop­erty in In­dia by way of in­her­i­tance or legacy from a res­i­dent living in or out­side the coun­try

HT Estates - - HTESTATES - Su­nil Tyagi

It is im­por­tant to un­der­stand in­her­i­tance rights of non­res­i­dent In­di­ans ( NRI) and prsons of In­dian ori­gin (PIO) vis-à-vis im­mov­able prop­erty in In­dia, as in ad­di­tion to in­her­i­tance laws, pro­vi­sions of For­eign Ex­change Man­age­ment Act, 1999 (FEMA) would also come into play. In­her­i­tance of im­mov­able prop­erty in In­dia by NRIs and PIOs is also reg­u­lated in terms of FEMA. Under FEMA, the Re­serve Bank of In­dia (RBI) is em­pow­ered to reg­u­late ac­qui­si­tion and trans­fer of im­mov­able prop­erty in In­dia by per­sons out­side In­dia, such as NRIs and PIOs.

An NRI and PIO may ac­quire any im­mov­able prop­erty in In­dia (in­clud­ing res­i­den­tial, com­mer­cial, agri­cul­tural, plan­ta­tion and farm­house prop­er­ties) by way of in­her­i­tance/legacy from a res­i­dent living in or out­side In­dia. This is im­por­tant to bear in mind given that NRIs and PIOs are not per­mit­ted to ac­quire agri­cul­tural land, plan­ta­tion prop­erty or farm­house prop­erty in In­dia by way of pur­chase or gift. Th­ese im­mov­able proper- ties may be in­her­ited by NRIs and PIOs pro­vided the de­ceased per­son had ac­quired such prop­erty in com­pli­ance with the for­eign ex­change law in force, at the time of ac­qui­si­tion of the prop­erty.

Ad­min­is­tra­tion of the es­tate

Rules gov­ern­ing suc­ces­sion and in­her­i­tance fall broadly under two cat­e­gories – tes­ta­men­tary suc­ces­sion and in­tes­tate suc­ces­sion. An in­di­vid­ual is said to die in­tes­tate if he does not leave be­hind a will, in which case his prop­er­ties would be dis­trib­uted amongst the le­gal heirs in ac­cor­dance with the per­sonal law ap­pli­ca­ble to the de­ceased. On the other hand, tes­ta­men­tary suc­ces­sion refers to the dis­tri­bu­tion of a de­ceased in­di­vid­ual’s prop­er­ties as per his/her de­sires stated in the last will. In In­dia, tes­ta­men­tary suc­ces­sion is gov­erned by the In­dian Suc­ces­sion Act, 1925.

To fa­cil­i­tate ad­min­is­tra­tion and in­her­i­tance of the es­tate of the de­ceased as per his/ her de­sires in the will, one is re­quired to ob­tain pro­bate or let­ters of ad­min­is­tra­tion, wher­ever com­pul­so­rily re­quired to be ob­tained. Once sat­is­fied as to due ex­e­cu­tion of the will as per re­quire­ments under In­dian Suc­ces­sion Act, 1925, courts grant a pro­bate or­der (or let­ters of ad­min­is­tra­tion, as the case may be) which cer­ti­fies the au­then­tic­ity of the will. In case the will is chal­lenged by any per­son, all le­git­i­mate doubts are to be re­moved – only then would pro­bate or let­ters of ad­min­is­tra­tion be granted.

I n sit­u­a­tions where t he de­ceased in­di­vid­ual had ex­e­cuted his/her will in a for­eign coun­try, set­ting out in­her­i­tance of prop­er­ties that are sit­u­ated within In­dia, an an­cil­lary pro­bate is re­quired to be ob­tained from an In­dian court of com­pe­tent ju­ris­dic­tion. When a will has been proved and de­posited in a for­eign court, a pe­ti­tion may be filed for grant of let­ters of ad­min­is­tra­tion/ an­cil­lary pro­bate. Once an In­dian court ac­cepts the pro­bate granted by the for­eign court as valid, the for­eign pro­bate would form the ba­sis for the grant of an an­cil­lary pro­bate in In­dia.

Re­mit­tance rules

For an NRI/PIO who wants to ul­ti­mately dis­pose of the in­her­ited im­mov­able prop­er­ties in In­dia, rules gov­ern­ing re­mit­tance are to be kept in mind. Under the ex­tant reg­u­la­tions by RBI, NRIs and PIOs are per­mit­ted to re­mit a max­i­mum amount of US$1 mil­lion per fi­nan­cial year out of as­sets in In­dia ac­quired by way of in­her­i­tance.

To fa­cil­i­tate re­mit­tance, they are re­quired to sub­mit doc­u­men­tary ev­i­dence of the in­her­i­tance, and make pay­ment of ap­pli­ca­ble taxes as pre­scribed by the Cen­tral Board of Direct Taxes from time to time. As re­gards re­mit­tances that ex­ceed US$1 mil­lion in any fi­nan­cial year, NRIs and PIOs have to ob­tain prior per­mis­sion from RBI.

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