Inheriting or receiving a gift from India as a Japan resident

The Indian side is simple and reassuring: India has no inheritance tax and no gift tax, and the income-tax law 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 Indian receipt is tax-free. Japan is where you have to pay attention, because it works differently from the other countries an NRI is likely to live in. Japan taxes the heir, the person receiving, and its inheritance tax rates climb to 55 per cent, among the very highest in the world. In principle, if you have your home in Japan, you are taxed on your worldwide inheritance, and that would include an Indian flat or your parents' Indian savings.

That is the default position, and it is why Japan needs care where Canada or New Zealand do not. But whether the Indian assets are actually caught turns on a specific rule about your immigration status and how long you have been in Japan, and for many NRIs that rule is the difference between a large Japanese tax and none at all.

Here is the rule that matters. If you are a foreign national living in Japan on a work or student visa, which Japan classifies as a Table 1 status of residence, and you have had your home in Japan for ten years or less out of the last fifteen years, you are treated as a temporary resident for inheritance tax. A temporary resident is taxed only on assets situated in Japan, not on foreign assets, so your Indian inheritance falls outside Japanese inheritance tax entirely. This relief was introduced in 2017 precisely so that internationally mobile professionals are not taxed by Japan on family wealth back home.

The qualifier is strict, and it is where people go wrong. It depends on your visa category. If you hold a spouse-of-a-Japanese-national visa or permanent residence, those are not Table 1 statuses, so the relief does not apply and Japan taxes your worldwide inheritance including the Indian assets, regardless of how few years you have been there. And even on a work visa, once you cross ten years of residence in the last fifteen, the worldwide charge returns. So the two questions to answer first are always your visa type and your years in Japan. When Japan does tax, there is a basic exclusion of 30 million yen plus 6 million yen for each statutory heir, and rates then rise up to 55 per cent. There is no inheritance treaty between Japan and India, and because India charges no death tax there is nothing to credit. Our role is the Indian end, which your Japanese adviser will need to size their side: the legal heir paperwork, a valuation of the Indian asset, a certificate confirming no Indian death tax, and repatriation of the inherited funds to you.