Cross-Border Estate and Inheritance Tax Risks for NRIs
India currently has no inheritance or estate tax, but NRI families can face tax abroad. US exposure depends on asset situs and US domicile; UK inheritance tax's worldwide scope generally follows long-term residence since 6 April 2025, with transitional rules. Map assets, citizenship, residence and applicable foreign rules before assuming an Indian inheritance is tax-free everywhere.
Last reviewed: June 2026 · Updated for AY 2026-27
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, but inherited-asset income — rent, interest and capital gains on a later sale — is taxable to the heir under applicable income-tax rules, subject to exemptions and the heir's facts. That is income tax, not estate tax. FEMA separately governs what a non-resident heir may hold and repatriate.
For NRI inheritance tax planning, reconcile title and beneficiaries using our asset-by-asset Indian succession and nominee-versus-heir guide. Review inherited balances against the NRE, NRO and FCNR account decision guide and the NRO account rules for India-source income and remittances. NRE eligibility is not created by receiving an inheritance; confirm the account and remittance route for your facts.
The United States: a low threshold for non-citizens.
US estate tax is the one that catches NRIs by surprise. A non-US-citizen who is not US-domiciled for estate-tax purposes is generally subject to US estate tax on US-situs assets — such as US real estate and shares in US companies — with only a USD 60,000 exemption equivalent to the unified credit, not indexed for inflation, and graduated rates up to 40% (IRC Sections 2101–2106). 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. Estate-tax domicile is not the same test as US income-tax residency; confirm it with a US estate attorney.
Which US assets trigger US estate tax (situs)
A non-resident, non-US-citizen (NRA), meaning a person not US-domiciled for estate-tax purposes, is exposed to US estate tax only on US-situs assets. The exemption is just USD 60,000, the unified-credit equivalent, not indexed for inflation, versus the multi-million-dollar exemption for US citizens and domiciliaries; graduated rates reach 40% (IRC Sections 2101–2106).
| Generally US-situs (exposed) | Generally NOT US-situs (typically outside the net) |
|---|---|
| US real estate directly held | US bank deposits in many cases, with exceptions (IRC Section 2105(b)); confirm the deposit's eligibility |
| Shares of US corporations, regardless of brokerage location or purchase currency (IRC Section 2104(a)) | Shares of foreign (non-US) corporations |
| US-domiciled ETFs and mutual funds | Foreign-domiciled funds even if they hold US stocks, such as Ireland-domiciled UCITS |
| ADRs, depending on the underlying asset; confirm treatment | Foreign real estate |
| US retirement accounts (401(k)/IRA), generally; confirm the arrangement and applicable inclusions | Foreign pensions and foreign bank accounts; confirm the arrangement |
| Tangible property physically in the US (IRC Section 2104) | Other non-US assets, subject to their own situs rules |
Situs looks to the underlying asset, not the custodian: using a foreign broker does not by itself change situs. Partnerships, ADRs and debt are fact-specific. The columns are classifications, not matched investment substitutes; confirm each holding with a US estate attorney.
US-situs estate tax: what planning actually looks like
No US-India estate-tax treaty exists. The India-US DTAA covers income tax only and does not cover estate tax. An Indian decedent's estate, where the decedent is a non-US-citizen and not US-domiciled, receives only the flat USD 60,000 unified-credit-equivalent exemption with no India-treaty uplift (IRC Section 2102). This is the single most important and most-missed point. Treaty-country cases, including UK and Canadian cases, may have different relief subject to their own treaty conditions; nationality alone does not establish eligibility.
These are options to discuss with a US estate attorney, not recommendations. Confirm against your facts with qualified US and Indian professionals before acting.
Fund domicile choice
Some NRA investors use non-US-domiciled funds, such as Ireland-domiciled UCITS ETFs, for US-market exposure because those funds are not US-situs, instead of US-domiciled ETFs. Their own cost, tax, access and reporting trade-offs must be assessed; this is an option to discuss, not a recommendation.
Lifetime gifting
For an NRA, gifts of intangible US property, such as shares of US corporations and US-domiciled ETFs, are generally not subject to US gift tax (IRC Section 2501(a)(2)). Gifts of US real estate and tangible US property are within US gift tax. This is fact-specific; confirm before acting, including any obligations of the recipient.
Holding structure
Holding US securities through a non-US entity can change situs but carries US income-tax and reporting trade-offs. Specialist advice is essential; the entity's classification and the wider family's tax position must be confirmed for your facts.
Non-citizen spouse
The unlimited marital deduction does not apply to a non-US-citizen surviving spouse; a Qualified Domestic Trust (QDOT) is the usual route, subject to qualifying conditions (IRC Sections 2056(d) and 2056A). A US estate attorney should confirm whether it is appropriate and how it must be administered.
Separate, coordinated wills
Separate wills for US-situs assets and Indian assets should be drafted so neither revokes the other. US and Indian counsel must coordinate ownership, beneficiaries and administration rather than treat either will as a stand-alone solution.
Form 706-NA filing considerations, asset valuation and available deductions belong with the US estate attorney and US CPA (IRC Section 6018(a)(2)). A filing threshold is not a guarantee of tax payable, nor a substitute for an estate-specific calculation.
The United Kingdom: inheritance tax and long-term residence.
The UK charges Inheritance Tax (IHT) at 40% above the nil-rate band (historically £325,000). Since 6 April 2025 the reach depends on long-term UK residence, not domicile: broadly, individuals UK-resident for 10 of the previous 20 tax years are exposed on worldwide assets, while others are exposed on UK-situs assets. Transitional provisions apply to former non-doms, so the position should be confirmed for your facts and year. The long-term residence provision is IHTA 1984, Section 6A.
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. The DTAA relief guide concerns income tax only, not estate-tax relief. There is no US-India estate-tax treaty. 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.
Which professional in which country?
The failure mode is each adviser optimising their own country in isolation — someone has to hold the whole map. Cross-border estate planning for an NRI family requires coordinated country-specific advice, not a single adviser assuming authority over every jurisdiction.
| Jurisdiction | Who you need | What they handle |
|---|---|---|
| India | Chartered Accountant + Indian succession/estate lawyer | Indian Will, probate/succession certificate, nominee-vs-heir reconciliation, Indian tax on inherited-asset income, and FEMA on inherited assets held by non-residents. |
| United States | US estate attorney + US CPA | US-situs exposure, the USD 60,000 NRA threshold, Form 706-NA, QDOT where a spouse is non-citizen, and gift-tax position. |
| United Kingdom | STEP-qualified solicitor / tax adviser | UK IHT under the residence-based test: long-term residence, generally 10 of the previous 20 tax years from 6 April 2025, and transitional rules for former non-doms (IHTA 1984, Section 6A). |
| Other (Canada/Australia/Gulf/Singapore/EU) | Local estate counsel | Deemed-disposition and estate rules vary widely; confirm locally. |
Start with the succession and estate planning hub for coordinated Indian and overseas assets. This is general information, not tax or legal advice; confirm the plan against your facts with qualified professionals in each relevant country.
Answered, candidly.
- Does India have an inheritance or estate tax?
- No. India abolished estate duty in 1985 and currently has no inheritance or estate tax. Rent, interest and capital gains on a later sale of inherited assets are subject to applicable income-tax rules in the heir's hands. FEMA governs what a non-resident heir may hold and repatriate; confirm the position for your facts.
- What is the US estate tax risk for NRIs?
- A non-US-citizen who is not US-domiciled for estate-tax purposes is generally exposed only on US-situs assets, with a USD 60,000 exemption equivalent to the unified credit, not indexed for inflation, and graduated rates up to 40% (IRC Sections 2101–2106). US citizens and domiciliaries face worldwide estate taxation with a multi-million-dollar exemption. Estate-tax domicile is not the same as income-tax residence; confirm your facts with a US estate attorney.
- Is there a US-India estate tax treaty?
- No. The India-US DTAA covers income tax only, not estate tax, and the US has no estate-tax treaty with India. For an Indian decedent who is a non-US-citizen and not US-domiciled, only the USD 60,000 exemption equivalent to the unified credit applies, with no India-treaty uplift (IRC Section 2102). Confirm eligibility and deductions with a US estate attorney.
- Do my US stocks/ETFs count even though I bought them from India?
- Yes. Shares of US corporations and US-domiciled ETFs are generally US-situs regardless of the brokerage's location or the currency used to buy them (IRC Section 2104(a)). A foreign broker does not by itself change situs. Foreign-domiciled funds, ADRs and other edge cases require asset-specific confirmation.
- How does UK inheritance tax work?
- Broadly, IHT is 40% above the nil-rate band. Since 6 April 2025 its worldwide reach depends on long-term UK residence (generally 10 of the previous 20 tax years), not domicile. Transitional rules apply to former non-doms. Confirm the position for your facts.
- Can I gift US shares or use a different fund domicile to reduce exposure?
- These are options to discuss with a US estate attorney, not recommendations. For an NRA, gifts of intangible US property are generally outside US gift tax under IRC Section 2501(a)(2), while US real estate and tangible US property gifts are within its scope. Non-US-domiciled funds can change situs but have cost, tax and reporting trade-offs. Confirm the asset, domicile and all relevant countries' rules before acting.
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/long-term residence rules, 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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