FEMA Rules for Inheritance, Gifts and Family Transfers
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.
Two questions run through every cross-border family plan: what can pass by inheritance, and what can move by gift during your lifetime — and in both directions, since money flows from parents in India to children abroad and back again. FEMA sets the boundaries on what NRIs and OCIs may receive, hold and remit, while the Income-tax Act decides whether a gift is taxable. Inheritance is treated generously; gifts are workable but rule-bound. Knowing which lever to pull, and how it interacts with repatriation, is what keeps lifetime transfers clean.
Inheritance under FEMA: broadly permitted.
FEMA is liberal on inheritance. An NRI or OCI may inherit immovable property and other Indian assets from a person resident in India — and, subject to conditions, from another person resident outside India who had acquired the asset in line with the law in force at the time. Inheritance even covers property types you cannot ordinarily buy, such as agricultural land, farmhouses and plantations. You may continue to hold inherited assets; FEMA does not force a sale.
Gifting to an NRI or OCI.
Residents can gift to NRI/OCI family members, within rules:
Immovable property
A resident may gift property (other than agricultural land, a farmhouse or a plantation) to an NRI/OCI relative.
Money
Rupee gifts to an NRI are typically credited to the recipient's NRO account. Where a resident wants to send foreign currency abroad as a gift, it counts within the resident's Liberalised Remittance Scheme (LRS) limit of USD 250,000 per financial year.
Shares and securities
Gifting of Indian securities to/from NRIs has its own FEMA conditions and reporting.
Gifting from an NRI to a resident (and between NRIs).
An NRI/OCI may also gift to a resident relative (commonly in rupees, credited appropriately) and to other NRIs, subject to FEMA. The practical questions are usually the account the gift lands in, the documentation, and whether the asset is one that can be freely transferred. For the day-to-day bank structuring around these family transfers — who can be joint holder, on what basis, and which account each rupee should land in — see joint accounts and family transfers.
The tax overlay: relatives vs non-relatives.
FEMA decides whether a transfer is permitted; the Income-tax Act decides whether it is taxed. Broadly: inheritance is not treated as taxable income; gifts from defined "relatives" are exempt; but gifts from non-relatives exceeding ₹50,000 in a year are taxable in the recipient's hands. Because "relative" is specifically defined and the thresholds matter, structure intra-family gifts with the tax position checked, not assumed.
Holding and moving the money later.
Whatever arrives by inheritance or gift usually sits in an NRO account, from which an NRI/OCI may repatriate up to USD 1 million per financial year with the required forms and tax. So a gift or inheritance today and a repatriation tomorrow are one connected plan — see Repatriation of Inherited Assets from India and the broader OCI & FEMA rules.
Answered, candidly.
- Can an NRI inherit any property in India under FEMA?
- Largely yes — including property you cannot ordinarily buy, like agricultural land, farmhouses and plantations, when it comes by inheritance from a person resident in India (and, with conditions, from another NRI/OCI).
- Can a resident parent gift property to an NRI child?
- Yes, other than agricultural land, a farmhouse or a plantation, which generally cannot be gifted to an NRI/OCI. Money gifts to an NRI are usually credited to NRO; sending foreign currency abroad uses the resident's LRS limit.
- What is the LRS limit?
- Under the Liberalised Remittance Scheme, a resident individual may remit up to USD 250,000 per financial year abroad, which is the route for foreign-currency gifts to family overseas.
- Are gifts taxable in India?
- Inheritance is not taxable income. Gifts from defined relatives are exempt; gifts from non-relatives above ₹50,000 in a year are taxable in the recipient's hands. "Relative" is specifically defined.
- Where does a gift or inheritance land, and can it be repatriated?
- Usually the NRO account, from which up to USD 1 million per financial year can be repatriated with the required forms and tax paid.
- Can an NRI gift money back to parents in India?
- Yes, subject to FEMA and the right account/documentation. The tax treatment depends on the relationship and amounts.
Related succession and cross-border resources.
Wills, inheritance, FEMA and repatriation in one cross-border plan.
USD 1 million NRO limit, Forms 15CA/15CB and the right sequence.
Tax, FEMA and next steps when you inherit Indian property.
Account, property and repatriation rules in depth.
Move family wealth without tripping FEMA or the taxman
Inheritance and gifts are powerful tools for global Indian families — when they are structured against both FEMA and the Income-tax Act. Plan the transfer and the eventual repatriation together.
General educational guidance — FEMA and income-tax rules on inheritance and gifts (including the LRS limit and the ₹50,000 threshold) change with each year/Budget and depend on facts. Not legal or tax advice.
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