7 Steps For Navigating Property Inheritance in India

Table of Content:

• Step 1: Identify Legal Heirs
• Step 2: Obtain Legal Documents
• Step 3: Apply for a Succession Certificate
• Step 4: Ensure Mutation of Property
• Step 5: Draft and Register a Release Deed
• Step 6: Draft and Register a Gift Deed
• Step 7: Pay Applicable Taxes
• Conclusion
• FAQs

Losing a loved one is never easy, and dealing with the practicalities that follow can feel overwhelming. While it may be difficult, at some point, you might find it necessary to begin addressing the legal steps, a significant part of this, is inheritance. Although these matters are tough to face, they are important for the future.

Whether the property is ancestral or recently acquired, it is a legacy that deserves protection. Managing inheritance smoothly honours this legacy and helps resolve family matters in an amicable, practical manner.

Fortunately, property inheritance law in India is well-defined, involving a series of legal steps designed to protect the rights of all parties involved.

Whether you inherit property through a will or as a legal heir without a will, this guide provides a clear, step-by-step breakdown, helping you ensure a smooth transition of assets to rightful heirs.

Step 1: Identify Legal Heirs

The first step is to identify all legal heirs of the deceased. This typically includes the spouse, children, and parents. In the absence of these heirs, you may consider other relatives. In India, the identification of legal heirs and the order of precedence in property inheritance are governed by different laws depending on the individual’s religion. The two major frameworks are the Hindu Succession Act, 1956 (for Hindus, Sikhs, Jains, and Buddhists) and the Indian Succession Act, 1925 (for Christians, Parsis, and others).

• Hindu Succession Act: According to this act, Class I heirs or the closest relatives–children, widows, or mothers– have the first (and equal) right to the property. If no Class I heirs exist, the property passes to Class II heirs like the siblings or other relatives.
• Muslim Inheritance Law: Muslim inheritance distributes property among sons, daughters, spouses, parents, and other close relatives. Laws vary slightly for Shia and Sunni Muslims.
• Christian Inheritance: For Christians, the Indian Succession Act states that in the absence of a will, property is split between the spouse and children. If no children exist, it moves to parents or siblings.
• Parsi Inheritance: Among Parsis, property is equally divided among spouses, children, and parents. In their absence, the property is passed down to siblings and extended family.

A valid will overrides the standard inheritance rules, and the property is distributed according to the deceased’s wishes. Although, for Muslims, only one-third of the property can be willed, and the rest follow Sharia or Islamic law.

Step 2: Obtain Legal Documents

Obtaining the necessary legal documents is crucial to move forward with the inheritance process. These documents validate the identity and the death of the deceased, as well as the intent regarding the property.

• Death Certificate: The death certificate is the first essential document, and you must get a certified copy from the local municipal authority or panchayat. This certificate is legal proof of death and is required to initiate any probate or inheritance process. In the absence of the original certificate, a duplicate can be obtained from the local municipal authority where the death was registered.
• Will: If the deceased left a will, it must be probated in the local court where the assets are located or where the deceased resides. In India, a single probate application will apply to multiple properties in different parts of the country. This legal process involves validating the will’s authenticity. If there is no will, the property distribution follows the laws of intestate succession, according to personal law (Hindu, Muslim, Christian, etc.).

Apart from these documents, during the probate process, you may need additional documents like legal heir certificates, affidavits, inventories of assets, and property appraisals to help the court ascertain the total value of the deceased’s estate and manage its distribution accordingly.

Step 3: Apply for a Succession Certificate

In the absence of a will, legal heirs must apply for a Succession Certificate from the court. This certificate is a legal document that establishes the heirs’ right to inherit the deceased’s property, bank accounts, and other assets.

The process involves filing a petition in the district court, followed by a public notice period for any potential objections. Once the certificate is granted, it authorises the heir(s) to claim ownership of the deceased’s estate.

Step 4: Ensure Mutation of Property

The next step for property succession is the mutation of property, also known as ‘Dakhil-Kharij’ or ‘Khatauni”. Here, you update land or property records to reflect changes in ownership due to sale, inheritance, gift, or any other transfer mode. In India, property owners can submit mutation applications through the office of the sub-registrar, or on the official website of their local municipal corporation or tehsildar.

This step legally recognises the heir as the rightful owner of a property by updating records in local municipal bodies and revenue departments. This helps identify your tax liability and prevents future legal disputes.

Step 5: Draft and Register a Release Deed

Sometimes, during the property succession process, one heir may relinquish their rights to the property in favour of another heir as a part of a settlement, to simplify ownership, or to streamline future transactions.

In such a case, a release deed or a no-objection certificate (NOC) can prevent future disputes. The release deed should clearly state details of the releasor (the person giving up their rights) and the release (the person receiving the rights). It must be signed, notarised, and registered with the appropriate sub-registrar office.

Step 6: Draft and Register a Gift Deed

Many times, during family settlements, one heir may want to transfer their inherited share to another person without monetary exchange. Here, a gift deed is necessary to transfer ownership legally.

Unlike the release deed, which can only be transferred to another heir, the gift deed can be used to transfer the property to anyone, even a charitable organisation. Like the release deed, though, the gift deed must also be made on stamp paper and signed by the donor and at least two witnesses. Gift deeds will also attract stamp duty that must be paid according to state laws and property value.

Step 7: Pay Applicable Taxes

Once the property is transferred, taxes become a key consideration. As of September 2024, India doesn’t have an inheritance tax on the national level, but other taxes and fees must be paid.

• Stamp Duty: Stamp duty is calculated based on the market value of the property and varies across states. It can also vary depending on the heir’s relationship with the deceased.
• Capital Gains Tax: If the property is sold at a later stage, the heir may be liable for capital gains tax, depending on the sale price, property’s valuation, and duration of ownership.
• Property Tax: The heir is now responsible for filing annual property taxes to the local municipal authorities once the property is in their name.

It’s crucial to seek expert tax advice to avoid unexpected liabilities. A tax advisor will help you fully understand which taxes apply based on the type of property and your relationship to the deceased.

Conclusion

While property inheritance may seem overwhelming, it is a meaningful process, often helping successors gain financial security and a sense of closure. By approaching it with the right information and legal guidance, you can smoothly navigate the process of property inheritance in India, avoiding unnecessary complications while claiming your inheritance.

FAQs:

What if a property dispute arises after the transfer of property?

Following the steps outlined in this guide will significantly reduce the likelihood of property disputes arising. However, should a dispute occur after the transfer, there are several options for resolution, including sending a legal notice, opting for mediation or arbitration, filing a civil suit, approaching RERA, or, in specific cases, filing a criminal complaint.

How do you write a will for property transfer in India?

To write a will for property transfer in India, list your assets, identify beneficiaries, appoint an executor, draft the will, sign with witnesses, and store it safely. Registration and legal advice are optional but advisable as they add security.