What happens when an NRI collector's Indian collection is inherited by a foreign national?
When an NRI's Indian numismatic collection is inherited by a foreign national — a child who holds foreign citizenship, a spouse who is a foreign national, or any other foreign-national heir — FEMA regulations govern what the inheriting foreign national can do with the collection in India. The foreign national heir can hold the inherited collection in India, sell it in India and receive proceeds in an NRO account, or repatriate the sale proceeds abroad subject to the FEMA repatriation rules and applicable taxes. They cannot simply take the collection out of India without ASI permits for antiquities and FEMA compliance for currency export.
FEMA and foreign national inheritance of Indian movable property
FEMA 1999 Section 6(4) permits a person resident outside India to hold, own, transfer, or invest in any immovable or movable property situated in India if the property was acquired by way of inheritance from a person who was resident in India at the time of acquiring such property. An NRI who owned the collection while residing in India (or acquired it as a resident NRI) has passed it to the foreign national heir by inheritance. The foreign national heir can hold this inherited collection in India under FEMA Section 6(4).
The foreign national heir cannot, however, freely export the collection. The same FEMA and AATA export restrictions apply to them as to any person exporting Indian currency or antiquities. Indian currency export: ₹25,000 face value limit. Antiquities (100+ year notes): ASI export permit required. The inheritance does not create any special export permission.
Repatriation of sale proceeds
If the foreign national heir sells the inherited collection in India, the sale proceeds must be deposited in an NRO account in the heir's name. The heir must pay applicable Indian income tax on any capital gain (the cost basis is the fair market value at the date of the original owner's death). After taxes, the proceeds can be repatriated abroad subject to the FEMA repatriation limits (USD 1 million per financial year for NRO account repatriation for inherited assets).
Succession certificate and legal formalities
A foreign national heir who wishes to deal with an inherited Indian collection must obtain a Succession Certificate from an Indian civil court if the collection includes any items requiring formal title transfer, or at minimum a Legal Heir Certificate establishing the inheritance. The process is the same as for any heir (discussed in Part 25 of this book) but with additional documentation establishing the foreign nationality and the valid inheritance. For significant collections, engaging an Indian advocate for the succession proceedings is strongly advisable.
Laws & authorities referenced in this chapter
FEMA 1999 — §6(4) (foreign national can hold inherited movable property in India: exception to general foreign holding restrictions)
FEMA 1999 — Foreign Exchange Management (Remittance of Assets) Regulations: NRO repatriation limit for inherited assets
Income Tax Act 1961 — §5, §195 (non-resident's India-source income: capital gains on inherited collection sold in India)
Indian Succession Act 1925 — Succession Certificate for foreign national heir dealing with Indian estate
Foreign national inheriting NRI's Indian collection: FEMA §6(4) — can hold inherited movable property in India. Cannot export freely: FEMA ₹25,000 currency limit + AATA ASI permit for 100+ year items. Sale in India: proceeds to NRO account; capital gains tax; repatriation up to USD 1 million per year after taxes. Cost basis: fair market value at date of NRI's death. Legal formalities: Succession Certificate or Legal Heir Certificate from Indian civil court + proof of foreign nationality + inheritance documentation.
This is educational content, not legal advice. For a specific situation, please consult a qualified legal professional. Excerpted from Currency, Coins & The Law by Mayank Agarwal, Part 30: NRIs & Indian Diaspora Collectors — FEMA, NRO/NRE Accounts, Export Limits, Repatriation, Inheritance by Foreign Nationals, Country-Specific Rules, GST on Export Sales.