- USD 1 Million Annual Limit: Under FEMA rules, an NRI or OCI can send up to 1 million US dollars each financial year from an NRO account without prior RBI approval.
- No 2-Property Limit on Inheritance: The rule that caps repatriation to two homes applies only to bought homes. It does not apply to inherited property.
- Use NRO Bank Account: Sale proceeds must go into an Indian NRO account. Buyers cannot send money directly to your foreign bank account.
- Tax Forms 15CA and 15CB: You must clear your Indian taxes before sending money abroad. You need Form 15CB from a CA and Form 15CA filed online.
- Why a Registered Will Matters: Banks demand clear proof of how you got the property. A registered Will gives the bank direct proof of your ownership.
- Lower TDS Option: Buyers must deduct tax when buying from an NRI. You can apply for a lower tax certificate under Section 197 to keep more cash.
Many Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) inherit real estate from their parents in India. When you sell an inherited flat, family home, or plot, you need to know how to send that money abroad safely.
Many NRIs worry about strict rules. Some think India allows you to sell only two houses. Others think you need permission from the Reserve Bank of India (RBI) before sending any money overseas.
Indian law is actually simple on this point. Under the Foreign Exchange Management Act (FEMA), you can send up to 1 million US dollars every financial year from your Indian bank account. You do not need prior RBI approval. In this guide, we explain the FEMA rules, clear up the two-property myth, explain Form 15CA and 15CB, and show why a registered Will helps your bank wire funds fast. You can also calculate family shares with our free succession calculator or start planning with our will drafting checklist.
1. FEMA Regulations on Repatriating Inherited Property
Foreign money transfers from India follow the FEMA Remittance of Assets Regulations, 2016. Regulation 4(2) covers money that comes from inherited property or a legacy.
Under this rule, an Authorized Dealer bank can let an NRI or OCI send up to 1 million US dollars per financial year. The financial year in India runs from April 1 to March 31. This limit applies to all funds in your Non-Resident Ordinary (NRO) account from inherited property sales.
What if your property sells for more than 1 million US dollars? You do not lose the extra funds. You can send the money abroad over multiple years. For example, if you receive 1.6 million US dollars, you can send 800,000 dollars this year and 800,000 dollars next year. Both transfers stay within the yearly limit.
Your bank may allow an NRI or OCI to remit up to 1 million US dollars per financial year from an NRO account. You must show papers proving how you inherited the property, along with tax forms approved by a Chartered Accountant.
2. Does the Two Property Limit Apply to Inherited Property?
Many NRIs ask a common question: "Can I sell and send money from my third inherited house, or does India cap sales at two properties?"
The short answer is no. The two-property cap does not apply to inherited property. This confusion comes from mixing up two different FEMA rules.
The two-property rule applies only when an NRI buys residential property in India using foreign funds from an NRE or FCNR account. If you buy houses with foreign funds, FEMA lets you repatriate the sale proceeds of up to two houses through the NRE route.
Inherited property is treated differently. It does not matter if you inherit three flats, two plots, or four shops. As long as you deposit the sale money into your NRO account, you can remit up to 1 million US dollars each year from all of them combined.
| Rule Feature | Purchased Property (NRE Route) | Inherited Property (NRO Route) |
|---|---|---|
| FEMA Regulation | FEMA Property Rules 2018 | FEMA Remittance Rules 2016 Reg 4(2) |
| Two House Limit | Yes - Capped at two houses | No - No limit on inherited homes |
| Yearly Cap | Amount of foreign funds brought in | Up to 1 million US dollars per year |
| Allowed Property | Houses and commercial units only | Houses, commercial units, and farmland |
| Bank Account | NRE or FCNR bank account | NRO bank account |
| RBI Permission | Not required within original funds | Not required up to 1 million US dollars |
3. Step-by-Step Procedure for Repatriating USD 1 Million Abroad
To transfer your inherited property sale proceeds abroad without trouble, complete these six practical steps:
Mutate the property title into your name in municipal records using the registered Will and death certificate before you sell.
Sign the sale deed with the buyer. Make sure the deed states that all payments go directly into your Indian NRO bank account.
The buyer must deduct tax at source (TDS). You can apply for a lower tax certificate under Section 197 to keep more of your funds.
Hire an Indian CA to check your purchase costs, tax receipts, and profit numbers. The CA then issues Form 15CB with an official UDIN.
Log in to the income tax portal and fill in Form 15CA using the 15CB details. Submit the form and download your receipt.
Give your bank Form A2, Form 15CA, Form 15CB, the registered Will, and the sale deed. The bank wires the funds to your overseas account.
4. Why a Registered Will Is the Top Document AD Banks Demand
When you ask your bank to wire a large amount of money overseas, bank officers must verify everything carefully. Under FEMA rules, bank officers face penalties if they send money without proper title proof.
If a parent dies without a Will, proving ownership is hard. You may need a legal heir certificate or a court order. This can take years in local civil courts. Other relatives might also raise disputes or ask for shares.
When there is a registered Will, everything is clear. The Will proves that your parent gave the property directly to you. Bank officers can review the Will, check the sale deed, and approve the wire transfer in just a few days.
- ☑ Registered Will or Court Grant: Shows clean title transfer to the NRI heir.
- ☑ Death Certificate: Original or certified copy from the municipal office.
- ☑ Registered Sale Deed: Proves the sale and shows funds paid to your NRO account.
- ☑ Form 15CB Certificate: Signed by a CA with an official UDIN number.
- ☑ Form 15CA Receipt: Generated from the income tax e-filing portal.
- ☑ Bank Form A2: The standard FEMA application for foreign wire transfers.
- ☑ Tax Challans: Proof that capital gains tax was paid in India.
5. Capital Gains Tax and Withholding (TDS) Rules for NRIs
Inheriting property in India does not trigger any inheritance tax. India ended estate duty in 1985. You do not pay tax just for receiving the property.
However, when you sell the property, you must pay capital gains tax. Under Section 49(1) of the Income Tax Act, your cost is based on what the original buyer paid for the property. Your holding time also includes the years your parent owned it.
If the combined holding period is over two years, the gain is treated as a long-term capital gain. Under Section 195, the buyer must deduct tax at source before paying you. This rate can be high if calculated on the total sale price.
To keep more cash, you can apply for a lower tax certificate under Section 197. This tells the buyer to deduct tax only on your actual profit, not on the total sale amount.
6. Repatriating Proceeds from Inherited Agricultural Land
FEMA rules do not allow NRIs to buy farmland, farmhouses, or plantations in India. But the law has a clear exception for inheritance.
An NRI can legally inherit agricultural land from an Indian resident. If you decide to sell the land later, you must sell it to an Indian citizen who lives in India.
Once you complete the sale, the money goes into your NRO account. You can then remit up to 1 million US dollars per financial year, just like any other property sale. This helps families sell ancestral village land and transfer the money abroad cleanly.
7. Sample FEMA Form A2 Declaration and Will Clause
Here are clear examples of the declaration your bank needs and the Will clause parents can use:
Note: Give this declaration with Form A2 to your bank branch.
Note: Clear wording in the Will helps the bank clear your funds quickly.
8. How Legal Planning Eliminates Repatriation Delays
Sending money abroad from an inherited property sale is simple when your papers are ready. Most delays happen when families sell first and look for missing tax receipts or heir papers later.
A registered Indian Will is the most effective tool parents can make. It protects their children from family disputes, speeds up property records updates, and gives banks the proof they need to wire funds overseas.
You can draft your legal Will online in minutes at WillDrafting.in. If you need help with cross-border estate plans or CA tax certificates, talk to our legal team at AMA Legal Solutions. You can also view our NRI Will Drafting Service, learn about our NRI Inherited Property Sale and Repatriation Package, or review our NRI Separate Indian Will Template.