Selling a flat you bought assumes three things: that you bought the property, that the title is in your name, and that you can sign the deed yourself. None of the three is true of an inherited sale.
First the revenue record has to be changed into your name. That can take a year if the estate is contested. Then you are taxed on a price your father paid decades ago. The amount you can send to the US is also capped, in a way it would not have been on a flat you bought.
The withholding rules do not change. Section 393(2) of the Income Tax Act, 2025, the old Section 195, still applies at 14.95% of the whole sale price for a long-term sale above ₹1 crore, with no minimum transaction size. (The detail is in the 14.95% TDS on the sale price.) Everything before and after that deduction is different.
This post covers the title, the withholding when there are several heirs, and the wire home. The tax on the sale in both countries is in cost basis, US tax and Form 3520.
1. Establishing that the property is yours to sell
A buyer will not register a purchase from someone whose name is not on the revenue record. Getting your name onto it is the slowest part of an inherited sale. Where you start depends on whether your parent left a will.
With a will, you need the original document, the death certificate and often probate, which is a court order confirming the will is valid. Probate is compulsory for wills made or property located inside the ordinary original civil jurisdictions of Bombay, Calcutta and Madras. Those are the historic city limits of Mumbai, Kolkata and Chennai.
Everywhere else the law makes probate optional. Banks and buyers' lawyers ask for it so often that you will probably need it anyway. Allow six months to two years, and longer if anyone objects.
Without a will, succession follows personal law. For Hindus, Buddhists, Jains and Sikhs, the Hindu Succession Act, 1956 splits the property equally among Class I heirs, which include the widow, the children and the mother. The 2005 amendment gave daughters the same coparcenary rights as sons, meaning an equal share in ancestral property from birth. In 2020 the Supreme Court confirmed that this applies whether or not the father was alive when the amendment passed.
Muslim shares are fixed by personal law and pass immediately on death, with no probate and no court order needed. Christians and Parsis come under the Indian Succession Act, 1925.
The paperwork runs in a set order. A legal heir certificate from the tahsildar, the local revenue officer, establishes who the heirs are. A succession certificate is a different document, issued by a civil court. It covers debts and movable securities rather than immovable property. Families confuse the two and lose months as a result. Any heir giving up a share signs a registered relinquishment deed, or the family signs a registered family settlement deed. The title can then be mutated into the heirs' names in the municipal or revenue record.
After mutation, assemble the same file as for a flat you bought: chain of title, encumbrance certificate, current tax receipts, society NOC, approved plan. Add your parent's original purchase deed. It matters more here than on a flat you bought, because it sets the cost India will tax you on.
Agricultural land
Agricultural land, farmhouses and plantation property follow different rules. You may inherit one. You may not buy one, and FEMA (India's foreign exchange law) also stops you from receiving one as a gift. No RBI permission is needed to inherit from a person resident in India.
The restriction returns when you sell. Inherited agricultural land can be sold only to a person resident in India who is an Indian citizen. That rules out other NRIs and OCI holders. It removes much of the buyer pool in the districts where inherited farmland usually is, and it is a common reason these sales stall.
It is unsettled whether the proceeds can leave India at all. Some advisers apply the general USD 1 million annual limit. Others read the RBI Master Direction as allowing repatriation only for property other than agricultural land, plantation property and farmhouses, which would leave the money in India. Get a written position from your authorized dealer bank before you sign. Once the money is in your NRO account, you are limited to what the bank will allow.
2. What the buyer withholds when there are several heirs
Each co-owner is a separate seller for withholding. The buyer deducts on each heir's share of the sale price, at the rate that applies to that heir. A flat passing to three siblings is three sales for withholding purposes, each taxed at whatever rate that heir's residency carries.
This situation is common, and buyers often get it wrong. Suppose a flat passes to three siblings, one living in Bengaluru and two in the United States. On a ₹1,80,00,000 sale, the buyer deducts 1% from the resident's ₹60,00,000 share and 14.95% from each of the other two shares. All three deductions have to be right on one registration, and most individual buyers have never done it.
The lower deduction certificate works the same way. Each non-resident heir applies separately on Form 128 under Section 395, using their own PAN, and gets a certificate for their own share only. One certificate will not cover the family.
Playbook Move: Have every non-resident heir file Form 128 at the same time, in the same jurisdiction, referencing the same sale agreement. Assessing officers work through a coordinated set faster than three applications arriving separately over two months. (We can help with the lower TDS certificate application.)
3. Moving the money
This is the second place inheritance is treated differently.
A seller who bought the property has two ways out. The first allows repatriation of the sale proceeds of up to two residential properties, provided you bought the property with an inward remittance or from an NRE or FCNR account. It depends on how the seller acquired the property. You acquired it by inheritance, so that route is closed to you. It is also a lifetime allowance of two properties, not two a year. If you have already used it on a flat you bought, it is no longer available.
That leaves the general limit of USD 1 million per financial year, in total, from your NRO account across every source. A ₹1,80,00,000 sale produces about $187,500 before tax, which fits inside the limit. A sale of roughly ₹9.6 crore or more, at ₹96 to the dollar, can exceed the annual limit on its own. You send the rest after the new financial year begins in April, or you apply to the Reserve Bank for approval above the limit.
Your authorized dealer bank will want documentary proof of the inheritance before it releases anything. That means the will and probate, or the legal heir certificate, plus the death certificate and the mutation record. Banks enforce this strictly. The file you assembled for the Indian registration is not the same file the remittance desk wants.
The filings are the same as for a flat you bought. You need Form 146, the old 15CB, from a chartered accountant, and Form 145 Part C filed by you, both under Rule 220.
Playbook Move: If the sale will exceed $1 million, either time the registration near the end of March so the receipt splits across two financial years, or start the RBI application before you sign. Banks generally raise the ceiling only after the remittance has been refused. (Our repatriation service handles the filings.)
The inherited sale, in order
- Find out whether there is a will. With one, collect the original, the death certificate and, where it is needed, probate. Without one, get the legal heir certificate from the tahsildar.
- Settle the shares. An heir giving up a share signs a registered relinquishment deed, or the family signs a registered family settlement deed.
- Mutate the title into the heirs' names in the municipal or revenue record.
- Assemble the title file, with your parent's original purchase deed added.
- Have each non-resident heir apply on Form 128 for a lower deduction certificate, all at the same time.
- Register the sale. The buyer withholds on each heir's share at that heir's rate.
- Take the proof of inheritance to the bank, with Form 146 and Form 145 Part C, and send the money within the USD 1 million annual limit.
From Edition 14 of the NRI Playbook newsletter. For informational purposes only; not financial, tax, or legal advice. For decisions about your specific situation, consult a qualified cross-border tax professional.