NRI vs. OCI: Drafting a Will for Indian Assets and Navigating Cross-Border Succession

Living outside India often comes with a complex asset footprint: a family apartment in Gurugram, an ancestral parcel in Punjab, NRE/NRO fixed deposits, mutual funds, alongside overseas savings in London, Singapore, or California.

When structuring the succession of these assets, a fundamental question emerges: Does an Overseas Citizen of India (OCI) require a fundamentally different Will drafting strategy than a Non-Resident Indian (NRI)?

The short answer: Under Indian succession law, the core mechanics of making a valid Will for Indian assets—testamentary capacity, execution formalities, and the application of personal law—depend on the nature and location of the assets and the personal law of the testator, not on whether you carry an Indian or a foreign passport.

However, drafting an NRI Will in India or an OCI Will in India involves navigating critical intersections beyond the document itself: foreign exchange management (FEMA) controls, remittance limits, overseas tax reporting, and multi-jurisdictional administration.

This guide examines the legal reality behind estate planning for NRIs and OCIs, common misconceptions to avoid, and best practices for creating an enforceable cross-border estate plan.

1. NRI vs. OCI: Core Distinctions at a Glance

Before examining property and succession laws, it is essential to distinguish citizenship from residence under Indian law:

Non-Resident Indian (NRI): An Indian citizen holding an Indian passport who resides outside India for employment, business, or an indefinite duration under the Foreign Exchange Management Act (FEMA).

Overseas Citizen of India (OCI): A foreign citizen of Indian origin holding a foreign passport who has registered as an OCI cardholder under Section 7A of the Citizenship Act, 1955.

Planning Dimension	Non-Resident Indian (NRI)	OCI Cardholder	Governing Framework
Right to Make a Will for Indian Assets	Full testamentary freedom over self-acquired assets, subject to personal law.	Full testamentary freedom over self-acquired assets, subject to personal law.	Indian Succession Act, 1925 / Applicable Personal Law
Inheritance of Immovable Property	Permitted to inherit residential, commercial, or agricultural land.	Permitted to inherit residential, commercial, or agricultural land.	FEMA 21(R) / RBI Master Direction
Sale / Transfer of Inherited Farmland	Permitted to sell or gift strictly to a citizen of India residing in India.	Permitted to sell or gift strictly to a citizen of India residing in India.	FEMA 21(R) / RBI Master Direction
Repatriation of Inherited Estate	Up to USD 1 Million per financial year via NRO account.	Up to USD 1 Million per financial year via NRO account.	Foreign Exchange Management (Remittance of Assets) Regulations
Executor Appointment	Can appoint an Indian resident or non-resident individual.	Can appoint an Indian resident or foreign citizen.	Indian Succession Act, 1925
Cross-Border Tax Considerations	Governed by residence country tax rules + DTAA.	Governed by country of citizenship/residence + DTAA (e.g., US worldwide taxation).	Relevant Domestic Tax Codes & DTAA treaties

2. Agricultural Land: The Legal Position Under FEMA

A persistent myth suggests that NRIs enjoy broad flexibility with agricultural land while OCIs face outright prohibitions. Under current Reserve Bank of India (RBI) regulations, both groups are treated substantially alike regarding acquisition and transfer.

Acquisition Restrictions

Neither an NRI nor an OCI can purchase agricultural land, plantation property, or farmhouses in India under Regulation 3 of FEMA 21(R).

Acquisition by Inheritance

Under Regulation 3(c) and 3(d) of FEMA 21(R), both an NRI and an OCI can legally hold immovable property in India acquired by way of inheritance from a person resident in India, or from a person resident outside India who had acquired the property in accordance with the foreign exchange law in force at the time of acquisition.

Subsequent Transfers and Testamentary Bequests

Where FEMA draws firm boundaries is on the subsequent disposal of agricultural land:

An NRI or OCI who holds inherited agricultural land, a farmhouse, or plantation property can transfer it by sale or gift only to an Indian citizen permanently residing in India.

While a testamentary bequest is distinct from an inter vivos sale or gift, cross-border testators must exercise caution when bequeathing agricultural property to non-resident beneficiaries. If non-resident heirs inherit agricultural land, FEMA regulations restrict them from selling or gifting that parcel to anyone other than a resident Indian citizen.

Drafting Note: If your estate contains agricultural land, structure your Will to account for practical revenue mutation procedures. Since non-resident heirs can only realize liquidity by selling to an Indian citizen residing in India, testators often prefer allocating urban residential properties or financial assets to overseas beneficiaries while directing ancestral farmland to resident family members.

3. Repatriation of Inherited Funds: The USD 1 Million Facility

Another area of confusion is conflating the Liberalised Remittance Scheme (LRS) with the Remittance of Assets framework.

LRS is for Indian Residents: The standard USD 250,000 annual LRS limit is a facility exclusively for resident individuals* remitting funds abroad.

Remittance of Assets Scheme: Repatriation of an inheritance from India by NRIs and OCIs is governed by the Foreign Exchange Management (Remittance of Assets) Regulations, 2016*.

Under this framework, an Authorised Dealer (AD Bank) can allow an NRI or OCI/PIO to remit up to USD 1,000,000 (one million US Dollars) per financial year out of balances held in their Non-Resident Ordinary (NRO) account, representing the proceeds of an inheritance or legacy.

Documentary Requirements & Tax Compliance

To utilize this facility, AD Banks require appropriate documentation to substantiate the inheritance and confirm tax compliance:

Proof of Inheritance: Evidence establishing the applicant's title to the legacy (e.g., an authenticated Will, legal heir certificate, or letters of administration, depending on the asset class and bank requirements).

Tax Compliance Certification: Form 15CA (an online undertaking by the remitter) and Form 15CB (a certification from an Indian Chartered Accountant confirming that applicable taxes on the inherited proceeds or capital gains have been duly paid or settled).

Amounts Exceeding USD 1 Million: Remittances exceeding USD 1 million in a single financial year are not processed automatically by authorized banks and require prior regulatory approval from the Reserve Bank of India under specified conditions.

4. Single Worldwide Will vs. Concurrent Situs-Specific Wills

Cross-border testators often ask: "Should I draft one single Will covering all my global assets, or separate Wills for each country?"

Having separate Wills is not a universal statutory requirement for OCIs or NRIs. Rather, it is a strategic decision that depends on where assets are physically located, the legal systems involved, and the administrative burdens of multi-country probate.

       Option A: Single Worldwide Will               Option B: Concurrent / Situs-Specific Wills
 ┌─────────────────────────────────────────┐   ┌─────────────────────────────────────────────────────────┐
 │ • One document covers all global assets │   │ • Will 1: Covers Indian assets (governed by Indian law) │
 │ • Administered sequentially             │   │ • Will 2: Covers overseas assets (governed by local law)│
 │ • Indian assets wait for foreign probate│   │ • Parallel administration in both jurisdictions         │
 │ • Higher documentation / court costs    │   │ • Risk: Accidental revocation clause between the two    │
 └─────────────────────────────────────────┘   └─────────────────────────────────────────────────────────┘

When Concurrent Wills Make Sense

For testators with substantial immovable or financial assets in India alongside assets in their country of residence (such as the UK, US, Canada, or Australia), concurrent (situs-specific) Wills offer significant administrative advantages:

Independent and Simultaneous Administration: An Indian Will allows your executor in India to initiate local estate transmission immediately, without waiting months or years for overseas probate courts to conclude proceedings.

Avoiding Section 228 Proceedings: If an estate relies exclusively on a foreign Will, establishing rights over Indian property may require an application before an Indian court under Section 228 of the Indian Succession Act, 1925 for Letters of Administration with an authenticated copy of the foreign probate annexed. This can entail translation expenses, court fees, and litigation delays.

The Revocation Clause Trap

When adopting concurrent Wills, coordination between your estate planning attorneys is essential. Most standard foreign Will templates contain boilerplate wording such as:

"I hereby revoke all prior wills, codicils, and testamentary dispositions made by me..."

If executed without geographic limits, this standard clause can unintentionally revoke your prior Indian Will. A properly structured Indian Will must explicitly state that its scope is confined strictly to assets situated within the Republic of India, and corresponding overseas instruments must mirror this jurisdictional boundary.

5. Overseas Execution and Attestation Formalities

Executing a Will from abroad does not require a flight to India. However, the document must strictly satisfy statutory execution formalities to be legally enforceable.

Execution Formalities (Section 63)

Under Section 63 of the Indian Succession Act, 1925, an unprivileged Will requires:

The signature or personal mark of the testator.

Attestation by two or more witnesses, each of whom must have seen the testator sign or execute the Will (or received a personal acknowledgment of signature), and each of whom must sign the Will in the presence of the testator.

Attestation by Beneficiaries: Legal Nuances

Under Section 67 of the Indian Succession Act, 1925, any bequest or legacy made to an attesting witness, or to their wife or husband, is void. The Will itself remains valid, but the gift to that witness lapses.

Important Exception: Under Schedule III of the Indian Succession Act, Section 67 does not apply to Wills executed by Hindus, Buddhists, Sikhs, or Jains.

Best Practice: Despite this statutory exemption for certain personal laws, having a beneficiary (or a beneficiary's spouse) act as an attesting witness creates a serious risk of suspicion regarding undue influence or coercion. Independent, disinterested witnesses should always be used.

Authentication and Notarization

To ensure smooth recognition before Indian banks, municipal corporations, and sub-registrars:

Testators residing abroad commonly sign before a local Notary Public and obtain an Apostille (in countries that are signatories to the Hague Apostille Convention) or have their signature attested at an Indian Embassy or Consulate.

While Section 63 governs the formal validity of the Will itself, apostille or consular authentication provides official verification of the signatures when the document is presented before authorities in India.

Is Registration of a Will Mandatory?

Under Section 18 of the Registration Act, 1908, the registration of a Will in India is entirely optional. An unregistered Will is legally enforceable so long as its execution and attestation meet statutory standards.

Registering a Will creates an official public record at the Sub-Registrar's office, providing an additional evidentiary safeguard against allegations of post-facto tampering or forgery. However, registration does not grant immunity against legal challenge, nor does it cure underlying defects such as lack of testamentary capacity, fraud, or coercion.

6. Executor Selection: Legal Eligibility vs. Practical Administration

The executor named in your Will is responsible for settling debts, gathering assets, and distributing the estate.

Eligibility of Foreign Citizens: Indian law contains no statutory prohibition against appointing an NRI, OCI, or foreign national as the executor of an Indian Will.

Fiduciary Duties Cannot Be Delegated: An executor's office is personal and fiduciary. An executor cannot broadly transfer their authority or bypass their responsibilities through a general Power of Attorney (PoA). While an executor may execute a Specific Power of Attorney authorizing a resident agent to perform administrative, clerical, or ministerial tasks (such as submitting papers or physical follow-ups), the core legal responsibilities remain with the named executor.

Practical Recommendation: Managing ground-level administration from abroad—attending to bank branches, tax authorities, and land revenue offices—can be challenging. Naming an India-based co-executor alongside an overseas executor simplifies local logistics significantly.

7. Nomination is Not Ownership

A common and costly assumption among overseas Indians is that adding a family member as a "nominee" on Indian bank accounts, demat portfolios, or mutual funds eliminates the need for a Will.

Under Indian jurisprudence, a nomination does not confer beneficial ownership.

A nominee acts strictly as a statutory trustee or custodian. Their function is to give the financial institution a valid legal discharge upon the holder's death, preventing assets from being abandoned. The proceeds held by the nominee remain subject to the claims of the legal heirs entitled to them under a Will or under intestate succession laws.

The Supreme Court of India has firmly established this principle across multiple decisions:

Banking Accounts: In Ram Chander Talwar v. Devender Kumar Talwar*, the Supreme Court held that nomination in bank accounts does not supersede succession laws, and the nominee holds the funds for the benefit of the legal heirs.

Corporate Shares & Demat Portfolios: In Shakti Yezdani v. Jayanand Jayant Salgaonkar (2023)*, the Supreme Court settled long-standing debates under company law, affirming that nomination provisions under the Companies Act do not create a separate line of succession or override testamentary or intestate succession rights.

Key Takeaway: A nomination ensures your family can access bank funds quickly; your Will determines who has the legal right to retain them.

8. Cross-Border Tax and Regulatory Considerations

While India does not levy an inheritance tax or estate duty—having abolished it in 1985—cross-border beneficiaries must account for tax reporting in their country of residence or citizenship:

Double Tax Avoidance Agreements (DTAA)

Income generated by inherited Indian assets (such as rental income, dividends, or interest) remains taxable in India. Non-resident heirs can claim credits or exemptions in their resident jurisdictions under applicable bilateral tax treaties (DTAA) by furnishing a Tax Residency Certificate (TRC).

US Citizens and Tax Compliance (FATCA / FBAR / PFIC)

For US citizens (and green card holders), including those holding OCI cards:

Worldwide Income Reporting: The US taxes based on citizenship, meaning all global income generated by Indian assets must be reported to the IRS.

FBAR & FATCA Disclosures: Inherited foreign financial accounts exceeding statutory thresholds require annual reporting on FinCEN Form 114 (FBAR) and IRS Form 8938.

PFIC Traps: Indian mutual funds are generally classified as Passive Foreign Investment Companies (PFICs) under US tax rules. Holding or inheriting Indian mutual funds can lead to complex annual reporting on IRS Form 8621 and punitive tax treatment. Estate plans involving US taxpayers often warrant careful structuring regarding whether Indian pooled investments should be liquidated or restructured.

9. Personal Law and Testamentary Freedom

India does not possess a uniform civil code governing testamentary succession. Testamentary freedom over Indian property is governed by the testator's personal law:

Hindus, Buddhists, Jains, and Sikhs: Testamentary disposition of self-acquired property is broadly governed by Section 30 of the Hindu Succession Act, 1956, read with the applicable provisions of Part VI and Schedule III of the Indian Succession Act, 1925. Subject to statutory provisions and ancestral coparcenary rights, a testator generally has full testamentary freedom over their separate or self-acquired property.

Christians and Parsis: Testamentary succession is governed directly by Part VI of the Indian Succession Act, 1925.

Muslims: Testamentary disposition is governed by Muslim personal law (Shariat). Under general principles, a Muslim testator cannot dispose of more than one-third of their net estate by Will without the consent of the legal heirs, with specific variations existing between Sunni (Hanafi) and Shia jurisprudence regarding bequests to heirs.

A properly drafted Will must always align with the personal law framework applicable to the testator.

Frequently Asked Questions (FAQs)

Can an OCI cardholder make a Will in India?

Yes. An OCI cardholder has full legal capacity to execute a Will disposing of their self-acquired assets in India, subject to the personal laws governing them. Citizenship does not restrict testamentary capacity under Indian law.

Can an NRI or OCI inherit property from parents in India?

Yes. Under FEMA regulations (specifically FEMA 21(R)), both NRIs and OCIs can freely inherit any type of immovable property in India—including residential, commercial, and agricultural property—from a person resident in India.

Is probate mandatory for an Indian Will executed abroad?

Not in every case. Under Sections 57 and 213 of the Indian Succession Act, 1925, probate is compulsory only for Wills executed by Hindus, Buddhists, Sikhs, or Jains within the historical presidential territories of Mumbai, Kolkata, or Chennai, or for Wills executed outside those territories if they deal with immovable properties situated within those specific limits. For properties outside these jurisdictions, probate is generally optional unless contested or specifically required by local rules or title institutions. If a foreign Will has already been probated abroad, Section 228 provides an established mechanism to obtain Letters of Administration in India.

Does an NRI or OCI have to pay inheritance tax in India?

No. India does not levy an inheritance, estate, or wealth tax on inherited assets. However, any regular income generated by the inherited asset (such as rent or bank interest) and any capital gains realized upon its subsequent sale will be subject to applicable Indian income-tax provisions.

Structuring Your Cross-Border Estate Plan

Whether you reside in London, Toronto, Dubai, or Singapore, protecting your assets in India requires a balanced approach:

Limiting jurisdictional scope to prevent unintended revocations across borders.

Structuring bequests in compliance with FEMA acquisition, transfer, and remittance parameters.

Appointing accessible co-executors who can manage ground-level administration effectively.

At iWills.in, we combine comprehensive knowledge of Indian succession frameworks and FEMA regulations with secure digital workflows to help NRIs and OCIs draft customized, legally sound Wills that protect their global legacy.

Disclaimer: This article provides general informational guidance on Indian succession and foreign exchange regulatory frameworks and does not constitute formal legal, financial, or tax advice. Cross-border estate planning often involves the laws of multiple jurisdictions; readers should consult qualified legal and tax practitioners for case-specific advice.