Inheriting or receiving a gift from India as a German resident

Start with the part that is genuinely simple. India does not tax you on an inheritance or a family gift. India abolished its estate duty in 1985 and its gift tax in 1998, and the income-tax law that now deals with gifts expressly exempts anything you receive under a will, by inheritance, or as a gift from a relative, under the proviso to Section 56(2)(x). So the money or property coming to you from India carries no Indian tax on the receipt itself. The one thing to keep in mind is that a large gift from someone who is not a relative can be taxable in India above ₹50,000, but a genuine inheritance or a gift from close family is clear.

Because India taxes neither the estate nor you as the beneficiary, there is no Indian tax bill to set against anything, and the whole tax question moves to Germany. That also means one route to relief is closed before it opens: German law gives a credit for foreign inheritance tax you have paid, but since India charges none, there is nothing to credit, and the German tax stands in full.

German inheritance and gift tax is charged on you, the person receiving, not on the estate, and it reaches worldwide. Because you are resident in Germany, the law brings your entire acquisition into charge, including the Indian assets, so inheriting a flat in Mumbai or receiving your parents' savings is treated the same as a German inheritance. What you pay turns on two things: your relationship to the person and the tax-free allowance that goes with it. A child has an allowance of €400,000, a spouse €500,000, a grandchild €200,000, but a sibling, a niece or nephew, or an unrelated person only about €20,000. Above the allowance, the rate depends on your class: in the direct line, parent to child, it runs from 7 to 30 per cent, while for distant relatives and non-relatives it runs much higher, up to 50 per cent.

Two further points matter for planning. Gifts to the same person within a ten-year window are added together and the allowance only renews every ten years, so spreading larger transfers across time can use the allowance more than once. And there is no inheritance treaty between Germany and India, so you cannot look to a treaty to divide the tax, it is simply German tax on the Indian inheritance. Our role is not to give German tax advice, your German adviser sizes that bill, but to hand them clean Indian numbers and paperwork: the legal heir or succession documents, a proper valuation of the Indian asset, a certificate confirming that no Indian inheritance tax is due, and the repatriation of the inherited funds out of India to you.