To transfer inheritance money from India to the USA, you route the funds through a Non-Resident Ordinary (NRO) account at an Indian bank licensed for foreign exchange, clear any Indian tax on the underlying assets, file tax-clearance Forms 15CA and 15CB, and then wire up to $1 million per Indian financial year to your U.S. account. Receiving the money is not taxable in the United States, but if the inheritance crosses $100,000 in a calendar year you must disclose it to the IRS on Form 3520. Miss that form and the penalty runs 5% per month, capped at 25% of the inheritance.
The NRO Account and the $1 Million Annual Cap
Every rupee leaving India passes through the Foreign Exchange Management Act (FEMA). Under FEMA, non-resident Indians and persons of Indian origin can repatriate inherited funds only through an NRO account held at an Authorized Dealer bank.
The Reserve Bank of India caps NRO remittances at $1 million per Indian financial year, which runs April 1 through March 31. That ceiling covers everything moving out of the account: sale proceeds from inherited real estate, liquidated investments, and cash balances. If your inheritance sits above $1 million once converted, you will need to split the transfer across two or more financial years. Funds in a Non-Resident External (NRE) account, by contrast, are freely repatriable with no cap, but inheritances typically land in NRO.
Indian Tax on Inherited Assets
Inheriting assets in India does not itself trigger income tax. Tax enters the picture when you sell an inherited asset, most often real estate, before sending the money abroad. The holding period runs from the date the original owner acquired the property, not from the date you inherited it, so if that combined period is more than 24 months the gain is long-term.
For inherited property sold after July 23, 2024, long-term capital gains are taxed at 12.5% without indexation. If the original owner purchased the property before that date, you can choose whichever is lower: 12.5% on the raw gain, or 20% on the gain after adjusting the purchase cost for inflation using the government’s Cost Inflation Index. Where the original purchase predates April 1, 2001, you may substitute the property’s fair market value as of that date for the actual cost.
When an NRI sells Indian property, the buyer must withhold tax at source (TDS) from the sale price and deposit it with the income tax department. That withholding often exceeds the actual liability, especially after indexation. You can claim a refund, but the refund cycle adds weeks or months. A Chartered Accountant familiar with NRI transactions can apply in advance for a lower withholding certificate, freeing up cash that would otherwise sit locked in the refund queue.
Documents the Bank Will Ask For
No Indian bank will process the wire without paper proof of three things: that the original owner died, that you are the rightful heir, and that Indian taxes on the assets are settled. Expect to produce:
- The death certificate issued by the local municipal authority.
- A certified copy of the will, or, if there is no will, a succession certificate from an Indian civil court under the Indian Succession Act, 1925. Courts typically take three to six months to issue one, so start early.
- Both the deceased’s Permanent Account Number (PAN) and your own.
- Proof of relationship to satisfy Know Your Customer rules: a birth certificate, marriage certificate, or family tree affidavit connecting you to the deceased.
Most delays come from name, date, or account-number mismatches across these documents. A single spelling discrepancy between the will and the bank records can bounce the file. If you are handling this from the United States, a power of attorney to a trusted person in India lets them appear in court, visit the bank, and chase paperwork on your behalf.
Tax Clearance: Forms 15CA and 15CB
Indian law requires tax clearance before any cross-border remittance, and this happens in two steps.
A licensed Chartered Accountant prepares Form 15CB. The accountant reviews the source of the funds, confirms that capital gains or other taxes have been paid, and certifies the payment details, the applicable rate, and any tax deducted.
Using that certificate, you or your representative file Form 15CA on the Income Tax Department’s e-filing portal. Form 15CA is your self-declaration that Indian tax obligations tied to the remittance are met. Filing generates an acknowledgment number, and the bank will not release the wire without it.
The Wire Itself
With the acknowledgment number, the succession certificate or will, and the rest of the paperwork, you submit the full package to the Authorized Dealer bank holding your NRO account. The bank runs its own FEMA review, converts rupees to dollars at the prevailing rate, and sends the funds through the SWIFT network to your U.S. account. The transfer typically clears in three to five business days.
The Indian bank charges a wire fee and often applies a margin on the exchange rate. On large transfers, the combined cost can run between 1% and 2% of the amount moved, so it is worth comparing quotes across banks before committing. Once the wire completes, the bank issues a remittance advice slip. Keep it permanently. It is your proof that the funds left India through legal channels.
U.S. Reporting: Form 3520
The United States does not tax foreign inheritances as income. It does insist on knowing about them. If you receive more than $100,000 from a nonresident alien or a foreign estate in a single calendar year, you must file Form 3520, the Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts.
Form 3520 is informational; it does not by itself generate a tax bill. It is due when your individual return is due, generally April 15, including any extension you have on file. The penalty for late or incomplete filing is 5% of the inheritance value per month, up to 25%. The IRS can waive it for reasonable cause, but it interprets that standard narrowly. On a $500,000 inheritance, the maximum penalty is $125,000, so file on time.
FBAR and Form 8938 While the Money Is Still in India
Two additional reporting obligations apply while inherited funds sit in Indian accounts before you move them.
The FBAR (FinCEN Form 114) is required if the combined value of all your foreign financial accounts exceeds $10,000 at any point during the calendar year. It is filed electronically with the Financial Crimes Enforcement Network.
Form 8938, under the Foreign Account Tax Compliance Act (FATCA), is filed with your tax return. Its thresholds are higher: for a single filer living in the United States, $50,000 on the last day of the tax year or $75,000 at any point during the year; those doubles for married couples filing jointly. The FBAR and Form 8938 overlap but are not interchangeable. Filing one does not excuse the other. An NRO account holding a sizable inheritance will almost certainly trip both. File both until the Indian accounts are emptied and closed.
Credit for Indian Tax Already Paid
If you paid Indian capital gains tax on the sale of inherited property, the U.S.-India Double Taxation Avoidance Agreement lets you claim a credit against U.S. tax on the same gain. You claim it on IRS Form 1116, Foreign Tax Credit. Capital gains from Indian property generally fall into the passive category income basket on that form. The credit is limited to the U.S. tax attributable to the foreign-source income, so it will not shelter your domestic earnings, but it typically eliminates or sharply reduces double taxation on the Indian gain. Keep the Indian tax receipts and the Chartered Accountant’s certificate; you will need both if the IRS asks.
How Long the Whole Process Takes
End to end, expect anywhere from a few months to over a year. The variables are whether a succession certificate is needed and whether the total exceeds the $1 million annual cap. A rough sequence:
- Months 1 to 6: obtain the death certificate, probate the will or petition for a succession certificate, and gather bank and property records.
- Months 3 to 9: sell any inherited real estate, pay capital gains tax, and pursue TDS refunds where applicable. These steps can overlap with probate.
- Month 9 onward: engage a Chartered Accountant for Form 15CB, file Form 15CA, and submit the package to the Authorized Dealer bank. The wire itself takes days; assembling everything is where the calendar fills up.
Any U.S. tax year in which you hold Indian assets should account for the FBAR, potentially Form 8938, and Form 3520 if the inheritance arrived that year. A U.S. tax professional who handles cross-border matters is worth the fee. Penalty exposure from a single missed form dwarfs the cost of the advice.