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Inheritance & Estate

When the account holder was an NRI: inheriting NRE, NRO and FCNR balances

A parent or spouse who was an NRI has died holding Indian NRI accounts, and you are unsure what the heirs can claim and take abroad.

The person who died was an NRI, so their money in India sat in NRI accounts, an NRE account, an NRO account, perhaps an FCNR deposit. Now the heirs, some abroad, some in India, need to claim it, and the rules differ by account type: what you can freely send abroad, what is capped, and what has to be re-labelled once the holder is gone. Getting this right matters because a wrong step, leaving an account in the deceased's NRI status, or trying to repatriate NRO money the wrong way, is itself a breach of the exchange-control rules.
Last reviewed: 26 July 20267 min readReviewed by Preetesh Maloo, CA

The short answer

When an NRI account holder dies, the account is frozen to further operation and the balance is released to the nominee or the legal heirs on the bank's papers. What you can take abroad depends on the account: NRE and FCNR balances are fully repatriable, so an NRI heir receives them in repatriable form, while an NRO balance goes out through the USD 1 million a year route with Form 15CA and 15CB. A resident heir simply keeps the money in India in a resident account. And the account status must change on death, an NRE or FCNR deposit claimed by a resident heir becomes an ordinary domestic deposit.

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What each account lets the heirs take abroad

The account type decides the repatriation, and this is the practical heart of it. NRE and FCNR balances are fully repatriable, both principal and interest, so an NRI heir or nominee receives them in repatriable form and can hold or send them abroad without a ceiling. These were always foreign-sourced repatriable funds, and death does not change that.

An NRO balance is different. It is not freely repatriable; an NRI heir moves it abroad through the USD 1 million per financial year route under the Remittance of Assets Regulations, supported by the inheritance papers, a will, succession certificate or legal-heir certificate, and Form 15CA and 15CB, now numbered 145 and 146. So two heirs inheriting the same estate can face different mechanics depending on whether the money sat in an NRE or an NRO account. A resident heir does not repatriate at all, the money simply stays with them in India.

The account status has to change

An NRI account cannot simply continue in the deceased's name and status. On death, the account is frozen to further operation and then settled, and the status changes according to who inherits.

Where the heir is a resident, an NRE or FCNR term deposit claimed by them is re-designated as an ordinary domestic rupee deposit, and it earns interest at the domestic rate for the rest of its term, not the NRI rate. Where the heir is an NRI, the funds move into that heir's own NRI accounts, NRE or NRO as appropriate to how they are repatriable. Leaving an account running in the deceased NRI's name, or a returning heir keeping an NRE account after becoming resident, is a common exchange-control breach, so the re-designation is not just paperwork, it keeps the funds compliant.

The tax on the interest

The inheritance itself is not taxed, India has no inheritance or estate tax. The interest is where tax and status meet.

Interest on an NRE account is exempt under Section 10(4), but only while the account holder is a non-resident under the exchange-control law. The exemption tracks the holder's status, so once the deposit is re-designated to a resident heir, the exemption ends and later interest is taxable in that heir's hands. NRO interest is taxable throughout, and for a non-resident heir it carries TDS under Section 195 at around 30% plus surcharge and cess, which a treaty rate can reduce with a tax residency certificate and Form 10F, now Form 41, or a lower-TDS certificate, Form 13, now Form 128. A practising CA claims the right repatriation route for each account, re-designates the status, and keeps the interest taxed correctly for each heir.

What's involved

What the CA actually does

  1. 1

    We claim each account the right way

    We use the correct route for each: full repatriation for NRE and FCNR, the USD 1 million route with Form 15CA and 15CB for NRO.

  2. 2

    We re-designate the status

    We change the account status on death so nothing runs on in the deceased's name, and a resident heir's deposit becomes a compliant domestic one.

  3. 3

    We fix the interest tax

    We apply the NRE exemption only while it holds, and set up the right TDS and treaty rate on NRO interest for each heir.

  4. 4

    We handle the repatriation paperwork

    We prepare the inheritance evidence and the Form 15CA and 15CB so an NRI heir can move their share abroad cleanly.

What to have ready

Documents you'll typically need

  • The account and deposit details by type (NRE, NRO, FCNR)
  • The death certificate and the nomination, if any
  • The will or succession or legal-heir certificate
  • Each heir's residency, PAN and bank account

Your destination country can change the details

Requirements differ from one consulate, university and visa route to the next, how recent the figures must be, how long funds must have been held, and which certificates are mandatory. We assemble the documents around the exact checklist you're applying under. To see how India's tax treaty with your country of residence affects related filings, set your country below or compare all 46 countries.

References on this page

  • NRE and FCNR balances are fully repatriable to the heirs (principal and interest)
  • NRO balances repatriate through the USD 1 million per financial year route (Remittance of Assets Regulations), with Form 15CA / 15CB
  • The account status must change on death: an NRE/FCNR deposit claimed by a resident heir becomes a domestic deposit
  • NRE interest is exempt only while the holder is a non-resident (Section 10(4)); NRO interest is taxable, TDS under Section 195

Frequently asked questions

Common questions

It depends on the account. NRE and FCNR balances are fully repatriable, so an NRI heir receives them in repatriable form. An NRO balance goes abroad through the USD 1 million a year route with Form 15CA and 15CB. A resident heir keeps the money in India.

No. On death the account is frozen and settled, and the status must change. An NRE or FCNR deposit claimed by a resident heir becomes a domestic deposit; an NRI heir's share moves to their own NRI accounts. Leaving it running in the deceased's status is an exchange-control breach.

The inheritance itself is not, India has no inheritance or estate tax. Only the interest is taxable: NRE interest is exempt while the holder was a non-resident but becomes taxable once re-designated to a resident heir, and NRO interest is taxable with TDS under Section 195.

Yes. NRO interest for a non-resident carries TDS at around 30% plus surcharge and cess, but a treaty rate can cut it with a tax residency certificate and Form 10F, now Form 41, or a lower-TDS certificate, Form 13, now Form 128.

The exceptions that change the answer

Where the general rule stops applying to you

Every rule below has a carve-out, a cut-off date or a condition that flips the answer. These are the ones that decide real cases.

NRO account: what it costs and what it caps

Right now: Interest taxed at 30% plus surcharge and cess; repatriation capped at USD 1 million a financial year

Where it works differently

A TRC and Form 10F (Form 41 from 1 Apr 2026) are furnished
The treaty rate applies to the interest, commonly 10-15% under Article 11 instead of 30% plus surcharge.
s.90(2). This is the single largest recurring recovery item for most NRIs.
Remitting out
Form 15CA is needed, plus Form 15CB from a CA where the remittance is chargeable and above Rs 5 lakh in the year.
Rule 37BB.
Joint holders
The USD 1 million ceiling is per person per financial year, so joint holders each have their own.
FEMA 13(R).

Commonly got wrong

  • NRO interest is taxed at 30%. Incomplete. Surcharge and 4% cess sit on top, and a treaty can cut it to 10-15%.30% plus surcharge and cess by default, but 10-15% under most treaties if you hold a TRC and file Form 10F.

NRO repatriation ceiling

Right now: USD 1,000,000 per financial year, per person

Where it works differently

The sale proceeds exceed USD 1 million
The balance waits for the next financial year. Joint holders each have their own limit.
The cap is per person per financial year.
The property was bought with foreign-currency funds
Sale proceeds of up to two residential properties may be repatriated outside this cap, limited to the original foreign-currency investment.
FEMA 21(R). Requires the original remittance trail.
Remitting
Form 15CA and, above Rs 5 lakh of taxable remittance, Form 15CB from a CA are required.
Rule 37BB.

Commonly got wrong

  • NRIs can remit USD 250,000 a year. That is the LRS limit for RESIDENTS. NRIs use the Remittance of Assets route at USD 1 million.An NRI does not remit under LRS. NRO balances and sale proceeds go out under the Remittance of Assets route, capped at USD 1 million per financial year, with Form 15CA and 15CB.

FCNR(B) deposit tenure

Right now: 1 to 5 years; term deposits only, no savings variant

Where it works differently

The holder returns to India permanently
The deposit may run to maturity, then converts to RFC. Interest stays exempt while the holder is RNOR.
Master Direction on Deposits and Accounts.
Premature withdrawal before 12 months
No interest is payable.
Standard RBI condition on FCNR(B).

Commonly got wrong

  • FCNR accounts work like a savings account. FCNR(B) is a term deposit only, 1 to 5 years.FCNR(B) is a fixed deposit in foreign currency, one to five years. There is no FCNR savings account.

Primary residence test: days in India

Right now: 182 days

Where it works differently

The person is an Indian citizen leaving India for employment abroad, or as a crew member of an Indian ship
Only the 182-day test applies. The 60-day secondary test is disabled.
Explanation 1(a) to s.6(1)
Counting days
The day of arrival AND the day of departure both count as days in India.
Settled administrative practice; partial days count as whole days.
The financial year straddles a move
Residence is decided for the WHOLE financial year, not from the date of the move. India has no split-year concept, unlike the UK.
s.6 is a full-year test.

Commonly got wrong

  • You become an NRI the day you leave India. True for FEMA, false for income tax. Under FEMA residence changes on departure with intent; under the Income-tax Act it is a full-year day count.Name which law you mean. Say 'non-resident under FEMA from the day you leave' or 'non-resident for income tax if you are in India under 182 days in that financial year'.
  • India has split-year treatment. It does not. Only the treaty tie-breaker resolves a dual-residence year.Point to Article 4 of the relevant DTAA.

Inheriting a deceased NRI's Indian accounts?

Tell us the account types and where the heirs are. A practising CA will claim and repatriate each correctly on a free call, no obligation.

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