Navigating cross-border inheritance in India can feel like a maze, especially with family members spread across continents. When an NRI (Non-Resident Indian), OCI (Overseas Citizen of India) or foreign national inherits Indian assets, such as a flat, company shares, or gold, the immediate question is:

How much of this wealth can actually leave India?
The answer hinges on a crucial provision of Indian foreign exchange law: the USD 1 million per financial year repatriation cap under the Foreign Exchange Management Act, 1999 (FEMA).

India’s foreign exchange framework is built around the principle that money earned or inherited in India does not automatically travel with its owner. The default position under FEMA is that foreign exchange, including the proceeds of selling Indian assets, must be accounted for and, in many cases, approved before it leaves the country.

The Enabling Provision: Section 6(5) of FEMA, 1999

The gateway provision for NRI/OCI/foreign national inheritance is Section 6(5) of FEMA, 1999, which states that a person resident outside India may hold, own, transfer, or invest in Indian currency, security, or any immovable property situated in India if such currency, security, or property was either acquired when the person was a resident of India, or inherited from a person who was resident in India.

The Repatriation Provision: Regulation 4 of FEMRA, 2016

The Foreign Exchange Management (Remittance of Assets) Regulations, 2016 (FEMRA, 2016) governs the outward movement of inherited funds.

Regulation 4 of FEMRA 2016 draws a clear distinction between two categories of remitters. For an NRI or Person of Indian Origin (PIO) (including an OCI cardholder), Regulation 4(2) provides that remittance of up to USD 1,000,000 per financial year is permitted through an Authorised Dealer (AD) bank, from: (a) balances held in NRO (Non-Resident Ordinary) accounts; (b) sale proceeds of assets inherited or acquired by way of inheritance or legacy; (c) assets devolving under a deed of settlement made by a parent or relative that takes effect on the settler’s death; and any other eligible asset sale proceeds.

For a foreign national who holds no Indian-origin status, Regulation 4(1) applies the same USD 1,000,000 ceiling but restricts eligibility to three specific circumstances: (a) retirement from Indian employment, (b) inheritance from a person covered under Section 6(5) of FEMA, or (c) widowhood following the death of an Indian citizen spouse resident in
India.

The Per-Person, Per-Year Structure: Strategic Implications

1. The Limit Is Per Person, Not Per Property
Each NRI/OCI has their own independent USD 1 million annual entitlement. If three siblings jointly inherit a property sold for ₹25 crore (approximately USD 3 million at current exchange rates), each sibling can remit their proportionate share up to USD 1 million each in a single financial year. Effective family planning can therefore multiply the usable repatriation capacity significantly. For example, if three brothers inherit one property, each brother gets his own USD 1 million remittance limit. So they can send out three times more money than if only one person had inherited the property.

2. Carryover to Subsequent Financial Years
The USD 1 million cap resets each financial year (April to March). The NRI/OCI is not required to repatriate inherited funds in a single year. Proceeds can remain in the NRO account and be remitted in tranches over multiple years each tranche within the annual ceiling.