Cross Border Succession of Immovable Property in India

Dealing with immovable property isn’t just a private affair between family members; it can encompass jurisdictional rules, principles of conflict of laws, and adherence to Indian laws governing foreign ownership and property transfer.

Figuring Out the Relevant Laws

The first step in this complicated journey is determining which laws apply to the succession of property. Generally, under private international law, the ownership of immovable property is governed by the lex situs, or the law of the location of the property. So, if someone owned an apartment in Mumbai but was a U.S. citizen living in California, Indian law will dictate how their inheritance is handled, regardless of their nationality.[1]

However, “Indian law” is not a single, straightforward statute. It’s a mix of personal laws based on religion, property laws like the Transfer of Property Act, and specific regulations under the Indian Succession Act. For instance, the Hindu Succession Act applies to Hindus, Buddhists, Jains, and Sikhs, while Muslims follow their own personal laws, which can vary by community. This diversity means that two heirs in similar circumstances might end up facing very different legal scenarios based solely on the deceased’s religion.

Understanding FEMA and Ownership Restrictions

One key aspect that often flies under the radar in cross-border inheritance is the Foreign Exchange Management Act, or FEMA. This legislation oversees foreign exchange transactions in India and sets out the rules governing how foreigners can acquire, own, and transfer property in the country. While FEMA has introduced a more liberal approach than its predecessor, FERA, it still imposes restrictions, particularly on individuals who aren’t Indian citizens or residents.[2]

For instance, NRIs and Overseas Citizens of India (OCIs) can inherit property in India from Indian residents or other NRIs/OCIs. However, citizens from certain countries, including Pakistan, Bangladesh, and China, face stricter regulations and must obtain prior approval from the Reserve Bank of India before inheriting property. When it comes to agricultural land or farmhouses, the rules are even tighter, as NRIs and OCIs can’t purchase such properties—they can only inherit them.[3]

The Importance of Compliance

When someone has prepared a will, the process of passing on their property falls under testamentary succession. Here, the Indian Succession Act governs how probate is handled for wills related to immovable property. A will created abroad can still be valid in India, as long as it meets the required formalities of the place where it was made or aligns with the nationality or domicile of the person who wrote it.[4] While the Hague Convention provides guidelines for international testamentary dispositions, India hasn’t ratified it, leaving Indian courts to follow similar principles based on mutual respect for foreign laws.[5]

Probate is a must in certain areas, like Mumbai, Kolkata, and Chennai, for wills that deal with immovable property. A probate order issued from abroad can potentially be recognized in India if it comes from a country that has established reciprocal arrangements with India. If not, a fresh probate proceeding might be required in India to validate the will.[6]

Intestate Succession and Jurisdictional Challenges

On the other hand, if the deceased didn’t leave a will, the rules of intestate succession apply. This situation can be especially challenging in cross-border cases, as it requires recognizing personal laws and managing differing regulations across jurisdictions.[7] For example, if the deceased had assets in both India and the UK, it may be necessary to initiate separate succession processes in each country. While Indian courts have authority over immovable property located in India, they cannot issue orders that affect property situated elsewhere.

Taxation Considerations

When it comes to inheritance in India, it’s important to know that while there isn’t an inheritance tax or estate duty, there are still some tax implications to consider, especially for properties inherited from abroad. For example, any income you earn from inherited property, like rent, will be taxed in India. If you decide to sell the property later, you’ll also face capital gains tax. If you’re an heir living in another country, it’s essential to understand how double taxation agreements (DTAs) between India and your home country will affect your tax situation.[8]

Additionally, when you transfer the inherited property into your name, stamp duty and registration fees will apply. While inheriting the property itself isn’t viewed as a “transfer” for income tax purposes, any actions you take with that property afterward certainly are. This highlights the need for careful planning and coordination between inheritance laws and tax strategies.

Judicial Interpretation and Recent Trends

The Indian judiciary has reinforced that laws related to property are governed by where that property is located. For instance, in a notable case back in 1950 in Moolji Jaitha and Company v/s Khandesh Spinning and Weaving Mills Company Limited[9], the Supreme Court ruled that foreign court decisions about immovable property in India could not be enforced if they contradicted Indian laws. Recently, there has been a rise in cases where inheritance involves Foreign Exchange Management Act (FEMA) provisions, especially for individuals from countries with restrictions.

A growing trend worth noting is the emergence of disputes surrounding digital assets linked to real estate, such as dematerialized shares in housing societies or online property registrations that require Aadhaar verification. When heirs are living abroad, even the simplest of compliance steps can turn into a challenge.

Practical Advice for Proactive Legal Planning to Avoid Disputes

To navigate the complexities of cross-border inheritance, proactive planning is key. Property owners should consider making a detailed will that outlines the property and identifies potential heirs according to FEMA regulations. It’s also a great idea for heirs living outside India to obtain Overseas Citizen of India (OCI) status, which can make compliance with FEMA a lot smoother.[10]

Handling cross-border succession isn’t just a matter of applying the Hindu or Indian Succession Act. It’s crucial to understand FEMA regulations, property registration requirements, and the specifics of evidencing foreign documents.

Conclusion

Cross-border succession of immovable property sits at the intersection of personal law, property law, and exchange control regulations. While the principles are well-settled in theory, i.e, lex situs, compliance with FEMA, and the primacy of personal succession laws, heirs often face prolonged disputes, inconsistent procedures, and regulatory bottlenecks.

What India needs now is a framework that anticipates, rather than reacts to, the realities of global mobility. Accession to international conventions on testamentary recognition, more straightforward RBI guidelines for inheritance by NRIs and OCIs, and streamlined probate processes can ensure greater predictability. Equally, harmonising succession law with modern property and exchange realities would signal that India is committed to safeguarding the interests of its diaspora while maintaining regulatory oversight.

If India seizes this moment to modernise its succession and property regime, it can turn a zone of conflict into one of confidence. The result will be fewer litigations and a stronger assurance to millions abroad that their ties to property back home remain secure under a transparent and future-ready legal framework.