Cross-Border Estate and Inheritance Tax Risks for NRIs
Regi Tom Antony, FCA — a practicing Chartered Accountant who advises NRIs, OCIs and returning founders on the same questions every week. Every page here is drawn from the book and live engagements, not stock copy.
This guide is part of NRI Blueprint's succession and estate planning hub, where we coordinate wills, inheritance, FEMA, probate and repatriation for global Indian families.
Most NRIs assume "no inheritance tax in India" means there is no estate-tax problem. For a family whose wealth and heirs straddle two countries, that assumption can be expensive. India levies no inheritance or estate tax — but the US, the UK and several other countries do, and they can reach your assets based on where the assets sit (situs) or where you or your heirs are domiciled/resident. This is a high-value, fact-specific area where the right structure — and a will built with it in mind — makes a real difference. Because the stakes and the variables are large, this is a topic to plan deliberately; see NRI Will & Dual-Will Planning for how the will should be set up.
India: no estate or inheritance tax.
India abolished estate duty in 1985 and currently has no inheritance or estate tax. Receiving an inheritance is not taxed in India. (Income and capital-gains tax can still arise later on inherited assets — but that is income tax, not an estate tax.) The exposure that families miss is almost always foreign.
The United States: a low threshold for non-citizens.
US estate tax is the one that catches NRIs by surprise. A non-US-domiciled individual (a non-citizen, non-resident) is generally subject to US estate tax on US-situs assets — such as US real estate and shares in US companies — with only a very small exemption (historically around USD 60,000) and rates up to 40%. An NRI in the US who is treated as US-domiciled faces estate tax on their worldwide estate, with a much larger exemption that is itself subject to legislative change. Either way, US assets in an NRI estate deserve specific planning.
The United Kingdom: inheritance tax and domicile.
The UK charges Inheritance Tax (IHT) at 40% above the nil-rate band (historically £325,000). The reach depends on domicile/residence: broadly, those treated as UK-domiciled are exposed on worldwide assets, while others are exposed on UK-situs assets. The UK's rules in this area have been undergoing reform (a shift away from the old domicile-based test), so the current position should be confirmed for your facts and year.
Other countries vary widely.
Canada
No estate/inheritance tax, but applies a "deemed disposition" — a capital-gains charge as if assets were sold at death.
Australia, UAE/Gulf, Singapore
Generally have no inheritance or estate tax.
Parts of Europe & others
Several European and other jurisdictions do levy inheritance or estate taxes, sometimes on the heir rather than the estate.
The point: your exposure depends on your corridor — where you live, where your heirs live, and where each asset sits.
Why double-tax relief is limited here.
Income-tax treaties (DTAAs) do not generally cover estate or inheritance taxes, and dedicated estate-tax treaties are rare. So a family can face a foreign estate tax with little or no Indian credit to offset it. That is exactly why the planning happens upstream — through asset situs, ownership structure, and sometimes trusts — rather than after the event. Where wealth is significant or complex, see Trusts for NRI Families.
What planning actually looks like.
Map each asset to its situs and to the estate-tax rules of the relevant country; identify where exposure is real (often US shares/real estate, or UK assets); consider ownership and structuring options; and align the will and any structures so the plan holds together across borders. This is bespoke work — there is no single template that fits every corridor.
Answered, candidly.
- Does India have an inheritance or estate tax?
- No. India abolished estate duty in 1985 and currently levies no inheritance or estate tax. Income or capital-gains tax can still arise later on inherited assets, but that is income tax, not estate tax.
- Why do people say NRIs face estate tax?
- Because the exposure is usually abroad. The US and UK, among others, levy estate or inheritance taxes that can reach an NRI's assets based on where the assets sit or where the person is domiciled.
- What is the US estate tax risk for NRIs?
- A non-US-domiciled person is generally subject to US estate tax on US-situs assets (like US real estate and US company shares) with only a small exemption and rates up to 40%. US-domiciled NRIs are taxed on worldwide assets with a larger, changeable exemption.
- How does UK inheritance tax work?
- Broadly, IHT is 40% above the nil-rate band, with the reach depending on domicile/residence. The UK rules in this area have been reforming, so confirm the current position for your facts.
- Can a tax treaty protect against foreign estate tax?
- Usually not. Income-tax treaties generally do not cover estate/inheritance taxes, and dedicated estate-tax treaties are rare — which is why upstream planning matters.
- Is this something to worry about for a modest estate?
- It depends on what and where you own. Even a modest holding of US shares or UK assets can create exposure. The first step is mapping your assets by country and situs.
Related succession and cross-border resources.
Wills, inheritance, FEMA and repatriation in one cross-border plan.
How the will should be set up across India and your country of residence.
When a family trust actually earns its place — and the cross-border traps.
Map foreign estate-tax exposure across your corridor with an FCA.
Find the foreign estate-tax exposure before it finds your family
India may not tax your inheritance, but the country you or your heirs live in might. Map the exposure across your corridor now — this is the most overlooked, and most expensive, gap in cross-border estate planning.
General educational guidance on foreign and Indian estate/inheritance tax; rules (US exemptions, UK IHT/domicile reform, etc.) change frequently and are highly fact- and jurisdiction-specific. Confirm with qualified cross-border tax/legal advisers. Not tax or legal advice.
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