Rights Of Grandchildren In Property Of Grandparents

Often NRIs deal with uncertainties about their rights of inheritance, after acquiring the status of NRI. Although there is no bar in inheriting property from grandparents, there are some rules regarding the handling of property. According to the Foreign Exchange Management Act (FEMA) of 1999, NRIs can acquire immovable property in India by way of inheritance. They can acquire all kinds of property including residential, commercial, agricultural land and/or farmhouse. Also as per the Hindu Succession Act of 1956, equal inheritance rights are ensured to both sons and daughters.

Understanding The Rights Of Grandchildren In Property Inheritance:

The rights of grandchildren depend on the type of property in question and arrangements made by the grandparents along with other corroborating factors. If grandparents have made any Will, then the property will be bequeathed as per the directions made in the Will. Even if the property distribution is made according to the wishes of the author of Will, it can be challenged in court as per the applied laws. It is advised to consult property lawyers regarding this and take appropriate measures after deliberations with them in such matters.

In case, if grandparents die intestate (without making a Will), then the property will be inherited as per the laws of succession, applicable at that time. It should be noted that laws of succession in India vary in various religious groups. If all the above situations permit inheritance of property by grandchildren from their grandparents, then it is advised to obtain the right to administration over the property either by obtaining probate or through a letter of administration from the court. After that, revenue records of the locality must be updated to avoid any kind of legal hassles.

Tax Implications On Inherited Property:

Taxation policies regarding the inherited property are clearly laid out. No tax is needed to be paid by the deceased (or his representative) nor by the inheritor for acquiring the inherited property. However, if an NRI earns an income from the inherited property, he will have to pay tax on this income as per the Income Tax Act. In case he intends to keep the inherited property vacant, for the purpose of residing in it during his visit to India, he does not have to pay any tax on such property.

Post inheriting the property, the owner has full right to sell/gift or give for a further inheritance of the property. The rules regarding selling property are clear; it can only be sold to residents of India or to NRI/PIO, in case of latter prior permission from RBI is required. In case of gifting it to the non-relative, the latter has to pay tax on the market value of the property. Repatriation of the sale proceeds should not be more than 1 million dollars every year, in case it is more than 1 million dollars, special permission from RBI is required.