Transferring inherited Indian shares to an NRI — 2026 working guide

When a parent or relative in India dies leaving shares, mutual-fund units or bonds, those securities need to be legally moved into the heir's name before anything can be done with them — sold, held, re-registered, repatriated. The process is transmission, not "transfer", and it is a well-defined procedure under SEBI's common transmission framework, finalised in 2022 and now followed uniformly by NSDL, CDSL and the registrar and transfer agents (RTAs). For an NRI or OCI heir, there is one additional layer: the receiving demat account must be the right type, and the FEMA provision that keeps the inheritance out of the usual NRI investment caps must be invoked.

Transfer vs transmission — the right word matters

Both mean "securities change hands". The legal path is different:

Transfer — voluntary disposition by the holder. Sale, gift, off-market move. Needs the holder's signature, consideration / no-consideration documentation, stamp duty, and in some cases RBI / SEBI approvals.
Transmission — securities pass by operation of law on the holder's death. No holder's signature (they are dead); the depository or RTA moves securities to the legal heir or nominee against a standardised set of documents.

Using the correct term on every request letter avoids months of back-and-forth. The standard covering form issued by most DPs is titled Transmission Request Form (TRF).

The two routes

Route 1 — nominee exists

Every demat account opened under current SEBI rules has a mandatory nomination (or a signed declaration opting out). Existing accounts without a nomination were given deadlines through 2023–2024 to add one. If a valid nomination exists for the deceased's demat account:

The nominee is entitled to have the securities transmitted to their own demat account, regardless of what the will says.
The nominee holds as trustee for the legal heirs — their role is custodial. A nominee who is also the heir under the will keeps the securities; a nominee who is not must hand over to the heirs under the will in due course.
Documentation is minimal: TRF signed by the nominee, a notarised / KYC-verified copy of the death certificate, the nominee's KYC, and the nominee's demat account details.
No Succession Certificate, Probate or Letters of Administration is required. This is the principal reason nomination matters.

For an NRI nominee, the receiving demat is a non-PIS NRO demat account (details below). The nominee can open one before filing the TRF if they don't already have it.

Route 2 — no nomination, or nominee pre-deceased

Without a valid nomination, transmission requires proof of the heir's title. The documentation splits on two variables: whether there is a will, and the aggregate value of securities held in the account.

If the deceased left a will

Probate (from the High Court having testamentary jurisdiction) or Letters of Administration with Will Annexed — the standard requirement. Probate is mandatory in the jurisdictions of the Bombay, Madras and Calcutta High Courts and for immovable property situated in those areas. For movable property elsewhere, probate is not strictly mandatory but DPs often still insist.
Notarised / apostilled copy filed with the DP along with TRF, death certificate, KYC of the heir(s).

If the deceased died intestate

Succession Certificate under the Indian Succession Act, 1925 for debts and movable securities; issued by a District Court (or High Court in original civil jurisdiction).
Alternatively, Letters of Administration from the competent court.
In limited cases, a Legal Heirship Certificate from the local tehsildar / revenue authority, accepted by some DPs for small-value accounts.

Simplified route for small-value accounts

Under SEBI's 2022 circular, DPs follow a value-based simplification:

Securities aggregate value up to ₹5 lakh per deceased holder per DP — transmission allowed on:
- Notarised death certificate;
- Affidavit by the legal heir claiming entitlement;
- No-Objection Certificates (NOCs) from all other legal heirs, duly notarised;
- Indemnity Bond by the claiming heir; and
- a transmission request form. No Succession Certificate / Probate needed.
Above ₹5 lakh and up to ₹15 lakh — some RTAs and listed companies extend simplified treatment with an indemnity and bank guarantee, at their board's discretion.
Above ₹15 lakh — Succession Certificate / Probate / LoA required.

The ₹5 lakh / ₹15 lakh thresholds are depository-level caps, not per-scrip caps. Check with the specific DP — some banks applying depository rules are stricter.

The NRI heir's demat account

Why the type matters

Under FEMA, the mode of acquisition determines which category the holding sits in:

Fresh investment from abroad → PIS (Portfolio Investment Scheme) route, through a PIS account attached to an NRE bank account; holdings are repatriable.
Investment from rupee sources (including inheritance, gift from a resident, bonus on already-held shares, rights issues funded from NRO) → non-PIS route, through an NRO non-PIS demat account; holdings are non-repatriable in principle, but sale proceeds can be repatriated from NRO within the USD 1 million per FY ceiling.

Inheritance falls squarely into the second bucket. The heir's receiving demat account must be the non-PIS NRO demat account.

The legal basis — Section 6(5) of FEMA

Section 6(5) of the Foreign Exchange Management Act, 1999 provides that a person resident outside India may hold, own, transfer or invest in Indian currency, security or immovable property in India that was acquired, held or owned when resident in India, or inherited from a person who was resident in India.

The practical effect for inherited shares:

No RBI approval is needed for the NRI to receive the shares.
No PIS route, no investment caps, no sectoral limit issues.
The securities can be held indefinitely, sold on the secondary market, transferred to another NRI heir, or gifted subject to the normal gift-tax rules.

If the deceased was an NRI

Section 6(5) refers to the deceased being "resident in India". If the deceased was themselves an NRI at the time of death, the inheritance is still permitted — SEBI / RBI treat NRI holdings eligible for transmission to NRI / OCI heirs without additional approval, provided the deceased acquired the securities in compliance with then-applicable rules.

Step-by-step — nominee case

Gather documents — original death certificate (with notarised copies), the nominee's KYC (passport, OCI card, overseas address proof, PAN, FATCA/CRS declaration).
Open an NRO non-PIS demat account at an Indian bank / DP, linked to an NRO savings account. Plan 3–6 weeks; the KYC cycle for NRIs is slower than for residents.
Submit the Transmission Request Form with the deceased's DP — the form signed by the nominee, death certificate enclosed, nominee's demat details.
DP verifies and credits the securities to the nominee's NRO demat account. Typical timeline 3–6 weeks from complete submission.
Registrar of the company / RTA updates its register; corporate actions (dividends, bonus, rights) from that point credit to the nominee.
Sell on the secondary market through a SEBI- registered broker on an NRO trading account — or hold, at the heir's choice.

Step-by-step — no-nominee case

Assess value and route — total value of securities in the deceased's demat account; whether a will exists.
For values under ₹5 lakh (simplified route) — obtain all legal heirs' NOCs and notarise; prepare the claimant's affidavit and indemnity bond on the format the DP prescribes. No court process needed.
For larger values or contested estates — apply for Probate (with will) or Succession Certificate (intestate) at the competent court in India. This is typically a 6–18 month process; engage a probate lawyer in the relevant jurisdiction.
Open the NRO non-PIS demat account in the heir's name (or heirs' names, for joint transmission).
Submit the TRF with the court order (or the simplified-route documents) to the deceased's DP.
DP processes and credits securities. Timeline 4–8 weeks after complete documents.
Intimate the RTA for direct holdings (physical certificates — see below) and for mutual-fund folios separately.

Physical share certificates

SEBI mandated compulsory dematerialisation for transfer of listed shares from 1 April 2019. Physical certificates can still be transmitted to an heir, but:

Transmission must route into a demat account — physical-to-physical transmission is not permitted for listed securities.
The RTA dematerialises the physical certificates into the heir's demat account against the TRF, death certificate, and court order or simplified -route documents.
Unlisted company shares (private limited, unlisted public) can still be held in physical form; the transmission request goes to the company directly rather than through a DP.

Mutual funds — parallel process

Mutual fund folios have their own transmission framework administered by the AMC and its RTA (CAMS / KFintech):

Nominee-held folios — transmission to the nominee on a shorter document set, similar to depository transmission.
Non-nominee folios — Succession Certificate / Probate / LoA above the simplified threshold (currently ₹5 lakh per AMC, with some AMCs extending to ₹15 lakh with indemnities).
The receiving folio must be in the heir's name with an NRI status tag; the linked bank account for redemption proceeds is the NRO account.

The PAN requirement

Every NRI heir receiving Indian securities needs a PAN. The PAN must be linked to the heir's demat, bank and MF folios. Without PAN, the whole chain breaks — DPs cannot update KYC, RTAs cannot process corporate actions, brokers cannot execute sales, and TDS defaults to the 20% Section 206AA rate on any distribution.

If the heir does not yet have a PAN, apply on Form 49AA (the form for non-residents and foreign nationals) before starting the transmission. See PAN card for NRIs.

Tax on sale after transmission

When the heir later sells the inherited shares:

Cost of acquisition — the deceased's original cost is the heir's cost under Section 49(1) of the Income Tax Act. Indexation benefits that applied to the deceased carry over.
Holding period — includes the deceased's holding period under Section 2(42A). If the deceased held for more than 12 months (listed equity shares / equity mutual funds), the heir's sale qualifies for long-term capital gains regardless of how long the heir personally held.
Grandfathering — for listed shares acquired on or before 31 January 2018, the cost can be stepped up to the highest market price on 31 January 2018 or the actual cost, whichever is higher, under the Section 112A regime.
Tax rate on LTCG for listed equity — 12.5% on gains exceeding ₹1,25,000 in a financial year (post-July 2024 Budget rates; no indexation).
Tax rate on STCG for listed equity — 20% on short-term gains (post-July 2024 Budget).
TDS on sale proceeds for NRIs — brokers deduct TDS at the capital-gains rate applicable to the NRI; for LTCG, 12.5% under Section 195, plus applicable surcharge and cess.
DTAA relief — treaties with some countries (US, UK, Canada, Singapore) allocate capital gains on shares to the residence country or provide concessional rates. Invoke with PAN + Tax Residency Certificate + Form 10F.

For the broader NRI tax framework, see NRI taxation in India.

Repatriation of sale proceeds

Inherited-share sale proceeds sit in the NRO account. From there, repatriation abroad is possible under the general NRO repatriation window:

Annual cap of USD 1 million per financial year across all NRO-to-abroad transfers (pension, rent, inheritance, sale proceeds combined).
Documentation — Form 15CA (Part C) filed online by the heir; Form 15CB certificate from a Chartered Accountant confirming Indian tax deduction or non-requirement, for amounts above the simplified threshold.
Bank AD-I processing at the remittance bank.

For the broader repatriation mechanics, see transferring funds from India.

Common pitfalls

Using an NRE / PIS demat for the transmission. Transmission under Section 6(5) goes into the non-PIS NRO demat. Mixing it up creates FEMA non-compliance that is messy to fix.
Waiting on Probate when the value is within the simplified threshold. Probate takes months and costs court fees. Check whether the ₹5 lakh or ₹15 lakh simplified route fits.
Forgetting to get NOCs from all legal heirs. Missing an NOC from a sibling or surviving parent is the most common simplified-route rejection.
Ignoring the cost-base carryover on sale. Heirs often file on the basis of their own "acquisition" date (date of transmission) — incorrect, and usually disadvantageous; inherit the deceased's holding period and cost.
Selling before PAN / KYC is complete. TDS defaults to 20% under Section 206AA and recovery on the annual return is slow.
Overlooking physical share certificates in old company files. Family finding old share certificates post-death must dematerialise them through the RTA before they can be sold.
Missing mutual-fund folios. They are managed by the AMC and not the same DP; run a CAMS / KFintech consolidated account statement search using the deceased's PAN to surface every folio.
Trying to register a foreign address directly at the DP / RTA. Use the overseas address; the bank / DP will ask for an overseas address proof and, increasingly, Aadhaar for verification — the process now accommodates this, but carry proof.
Treating inherited shares as "not sellable" because the account is non-repatriable. They are fully sellable; the non-repatriable tag affects repatriation of proceeds, not sale.
Missing the FATCA / CRS declaration. The NRO demat account KYC requires the heir to declare their tax residency; failure triggers reporting defaults.

Checklist — claiming inherited Indian shares as an NRI

Assemble documents — notarised death certificate, will (if any), details of deceased's demat account and PAN, complete list of scrips and folios.
Run a CAMS / KFintech consolidated statement on the deceased's PAN to confirm every MF folio; run NSDL / CDSL enquiries through the DP to confirm every demat holding.
Check nominee status on each account.
Determine value and route — simplified (under ₹5 lakh / ₹15 lakh per DP or AMC) or formal (Probate / Succession Certificate).
Obtain court order if the formal route is required.
Apply for / confirm heir's PAN on Form 49AA.
Open an NRO savings account and linked NRO non-PIS demat account in the heir's name.
File Transmission Request Forms with every DP, RTA, and AMC where holdings were found, enclosing the appropriate document set.
Verify corporate actions — dividends, bonus, rights issues between date of death and transmission may have credited to the deceased's account; these route to the heir on transmission.
On sale, ensure the cost base uses the deceased's original cost and holding period carries over.
Repatriate proceeds via NRO → Form 15CA/CB within the USD 1 million / FY cap.

Summary

Inheritance of Indian securities by an NRI, OCI or foreign-national heir is permitted without RBI approval under Section 6(5) of FEMA.
The process is transmission, not "transfer", following SEBI's 2022 common transmission framework.
Nominees get the fast route — death certificate, TRF, KYC.
Without a nominee, the heir needs either the simplified documentation (under ₹5 lakh / ₹15 lakh) or Probate / Succession Certificate / LoA for larger estates.
The receiving demat is the NRO non-PIS demat account. Sale is freely permitted; repatriation of proceeds goes via the standard NRO route with Form 15CA/CB within the USD 1 million / FY ceiling.
On sale, the heir inherits the deceased's cost base and holding period; post-July-2024 LTCG rates (12.5% above ₹1,25,000 for listed equity) apply.
PAN on Form 49AA for the heir is the single most important prerequisite.

For bank-account mechanics, see NRI bank accounts. For the repatriation framework on sale proceeds, see transferring funds from India. For the tax framework, see NRI taxation in India.