Do I pay tax when I inherit the property?

No. Inheritance is not itself a taxable transfer in India, and there is no estate duty. Tax arises when you sell — and until then, if the property is let, on the rental income.

What is my cost of acquisition if I never paid for it?

The cost of the person you inherited from. The law substitutes the previous owner's cost for yours, and where they in turn acquired it by inheritance or gift, it steps back again to whoever last acquired it for consideration. That is why the chain of title matters commercially and not just legally: the further back the purchase, the lower the cost — but also the longer the holding period.

Does my holding period start on the date of death?

No — it includes the previous owner's period of holding. This almost always works in your favour, because it is what makes the gain long-term even where you inherited only months before selling. It is also the point most often got wrong, in both directions.

How much TDS will the buyer deduct?

On the whole sale value, not on the gain — that is the trap that makes an NRI sale different from a resident one, and on an inherited property with a low substituted cost the deduction can dwarf the actual tax. The fix is a lower-deduction certificate obtained before the sale, and it is the single most valuable step available.

What if I cannot find the original purchase documents?

Common with inherited property, and it is the practical problem rather than the legal one. Start with the registered sale deed in the chain, the society or municipal records, and the previous owner's own tax records if the family holds them. Where the property was acquired long ago, a valuation may be needed as the starting point. The work is evidential, and it takes longer than people expect — which is the argument for beginning before a buyer is found, not after.

There are three of us who inherited it. How does that work?

Each co-owner is taxed on their own share of the gain, and the TDS position follows the same split. Every co-owner needs their own position established — including, where they are non-resident, their own lower-deduction certificate. One certificate does not cover the others, and a sale where only one sibling has done the work stalls at exactly the wrong moment.

Can I take the money out of India afterwards?

Yes, subject to the repatriation route. Sale proceeds are non-current income, which falls under the annual limit rather than being freely repatriable, and the reporting forms apply. If you obtained a lower-deduction certificate for the sale, that also simplifies the remittance.

Selling Inherited Property in India as an NRI

Short answer: inheriting the property is not taxed. Selling it is. The cost and the holding period both step back to the person you inherited from, which usually makes the gain long-term — and the buyer will still deduct TDS on the whole sale value, not the gain, unless you obtain a certificate first.

An inherited sale is not an ordinary sale with a sad story attached. The numbers are built differently, and the evidence you need sits with someone who is no longer available to explain it.

Inheritance is not the taxable event

There is no estate duty in India, and inheriting property is not a transfer that attracts tax in your hands. Two obligations do begin, though:

Rental income, if the property is let, is Indian-source income and taxable from the date it becomes yours.
The sale, whenever it happens, brings the gain into charge.

The cost is not yours — it is theirs

You paid nothing, but the gain is not the whole sale price. The law substitutes the previous owner's cost of acquisition for your own.

And it can step back more than once. If the person you inherited from had themselves inherited or been gifted the property, the cost travels further back — to whoever last acquired it for consideration.

The holding period does the same: it includes the previous owner's period of holding. That is why a property inherited six months ago and sold today usually still produces a long-term gain rather than a short-term one, and it is the point most often got wrong in both directions.

Commercially, this cuts two ways. The further back the original purchase, the lower the substituted cost — and so the larger the gain on paper. But the longer the holding period, and the more favourable the treatment of that gain.

The TDS problem is worse here than on an ordinary sale

When an NRI sells property in India, the buyer must deduct at source on the entire sale consideration, not on the gain. On any NRI sale that is a cash-flow problem. On an inherited property it is frequently worse, because the substituted cost is low and the deduction is computed against a value that bears no relation to what you will actually owe.

The remedy is the same and it is time-critical: a lower-deduction certificate under Section 197, applied for before the sale. Obtained, it aligns the deduction with the real liability instead of leaving you to reclaim the difference a year later through a return. The mechanics are in NRI property sale TDS.

For an inherited property, the application carries an extra burden: it has to evidence a chain of title and a cost you were not party to.

The evidence problem, which is the real one

Legally the position is settled. Practically, this is where inherited sales stall.

You need to establish what the previous owner paid, and when. That usually means:

The registered sale deed in the chain — the last acquisition for consideration
Society, municipal or land records where the deed is not available
The previous owner's own tax records, if the family retained them
Where the acquisition is genuinely old, a valuation as the starting point
Proof of your title — succession certificate, probate, or the will, depending on how the estate passed

This takes longer than anyone expects, and none of it can be done quickly under pressure from a buyer. Start it before the property is on the market, not after a price is agreed.

Where there are several of you

Co-owners are taxed on their own share of the gain, and the deduction at source follows the same split.

The practical consequence is that each non-resident co-owner needs their own certificate. One sibling's certificate does not cover the others, and a sale in which only one of three has done the work discovers this at completion — which is the worst possible moment.

Getting the money out

Sale proceeds are non-current income, so repatriation runs under the annual limit rather than being free, and the reporting forms apply. If you obtained a Section 197 certificate for the sale, the remittance is simplified by it — see when a repatriation actually needs a CA certificate.

The order that works

Establish the chain of title and the previous owner's cost — before marketing.
Compute the likely gain on that basis.
Apply for the lower-deduction certificate, for every non-resident co-owner.
Then agree the sale.
Repatriate, with the tax history documented.

Reversing steps three and four is the single most common and most expensive sequencing error on these sales.

This is a working reference, not the statute. The cost and holding-period rules for inherited property, and the treatment of the resulting gain, are confirmed against the current provisions before any computation is relied on.

Selling inherited property in India as an NRI