There are two different bodies of law in this question and they are routinely mixed up, which produces both false alarm and false comfort. Succession law decides who takes. Foreign exchange law decides what a non-resident may hold and what he may do with it. A bequest can be perfectly valid and still land the legatee in a regulatory problem, and that is the risk worth designing around.
The succession law answer
The Indian Succession Act, 1925 provides that every person of sound mind who is not a minor may dispose of his property by will. Nothing in that provision, or in the Hindu Succession Act's provision permitting a Hindu to dispose by will of property capable of being disposed of by him, imposes any condition on the nationality, residence or domicile of the person who takes. A German son in law, a British grandchild and a friend in Frankfurt are all capable legatees so far as succession law is concerned.
The qualifications come from elsewhere. If you are Muslim, personal law limits how much of the net estate you may give by will and to whom, and a bequest to a person who is not an heir beyond that limit needs the heirs' consent. If the asset is coparcenary property your power to give it away is limited by the nature of the property, not by the identity of the taker. And a will can dispose only of what is yours.
The foreign exchange layer
The Foreign Exchange Management Act, 1999 contains a provision that is genuinely protective. A person resident outside India may hold, own, transfer or invest in Indian currency, security or any immovable property situated in India if that currency, security or property was acquired, held or owned by him when he was resident in India, or was inherited from a person who was resident in India. Inheritance from an Indian resident is expressly within it, which is why families are often told, correctly, that inheritance is treated more indulgently than purchase.
That does not settle every case, and the honest answer is that it depends on facts I do not have. Four variables change the position and each of them should be checked rather than assumed.
- Who the person is. The rules distinguish a person of Indian origin or an overseas citizen from a foreign national of non-Indian origin, and the second category is regulated more tightly.
- Where you were resident. The protection quoted above is framed around inheritance from a person who was resident in India, so your own residence status at death is part of the analysis.
- What the property is. Agricultural land, plantation property and farmhouses sit under their own regime and are not treated like a flat.
- Which country the person belongs to. Nationals of certain countries face specific restrictions on acquiring or transferring immovable property in India.
A foreign legatee who inherits and then sells will find that repatriating the proceeds is governed by its own set of limits, conditions and bank documentation, and those are separate from anything in your will. Our guide on repatriating money from India as an NRI explains the channel and the paperwork. Nobody should assume that inheriting a Bengaluru flat means being able to move its full value abroad the following month.
The tax point, stated carefully
India does not levy an estate duty on inheritance at present. What does arise is a withholding obligation when the inherited property is later sold: where the seller is a non-resident the buyer's deduction obligation is not the one that applies to a resident seller, and the liability for getting it wrong sits with the buyer. Our guide on the withholding rules when an NRI sells property in India sets out the mechanics under the Income-tax Act, 2025 and the certificate route for reducing the deduction. Tell the person you intend to benefit that this exists, because a buyer who is surprised by it at the last minute is a sale that collapses.
How I would draft it
- Check the legatee's status first, and confirm the current position with an authorised dealer bank before you commit a specific asset to a specific person.
- Keep agricultural land out of a foreign national's bequest if there is any other way to achieve the same economic result, and equalise with a different asset instead.
- Give the executor a power of sale, so that if holding turns out to be impractical the estate can convert the asset and distribute the proceeds rather than being stuck.
- Add a substitutional gift. Provide expressly for who takes if the named legatee cannot or does not take.
- Make the Indian will a separate document. Our guide on the Indian will an NRI should make covers the drafting and execution points that make the gift usable rather than merely valid.