Jigar M. Patel
International Tax Attorney
Probate to Will whether required in Gujarat?
Query: My father passed away recently having appointed me as the Executor under his Will. All assets to be distributed under his Will, both movable and immovable, are located in Gujarat. Am I required to obtain a Probate before I execute the Will?
Reply: Probate is the certification of a Will by a court of competent jurisdiction and is granted to an Executor for administration of the estate under the Will.
Under the provisions of the Indian Succession Act, obtaining a Probate is mandatory only in respect of immovable properties located in Mumbai, Kolkata or Chennai (erstwhile British Presidencies). Since the properties under your father’s Will are located only in Gujarat, no Probate is required in your case.
Computing Capital Gains on Assets received under Will
Query: My grandfather passed away last month in May, 2024. Under his Will, I have inherited a residential property that he had purchased in August, 2001 for Rs. 25 lakhs. I plan to sell the same during this financial year and the sale is expected to realise around Rs. 1 Crore. Kindly explain what will be my liability for capital gains tax and how the same will be computed?
Reply: The good news for you is that you can sell your inherited property right away and still offer your capital gains to tax, as Long-term (and not Short-term), keeping in view the special provisions of section 2(42A) of the I.T. Act, as per which in case of a capital asset acquired by a taxpayer under special modes of acquisition such as gift, Will or inheritance, the period of holding of the previous owner is also included in computing the period of holding of the taxpayer. Moreover, under the special provisions of Section 49, the cost of acquisition of your grandfather shall be deemed to be your cost of acquisition.
It further needs to be noted that as per the current settled judicial position, the benefit of indexation, in such cases as yours, would also be available and accordingly, the same can be computed from FY 2001-02, when your grandfather acquired the property. Considering the Cost Inflation Index (CII) of 363 for 2024-25 with reference to the CII of 100 for 2001-02, the Indexed Cost of Acquisition would work out to Rs. 90.75 lakhs (Rs. 25 lakhs x 363/100). Keeping in view your anticipated sale consideration of around Rs. 1 crore, the taxable LTCG in your case would work out to only Rs. 9.25 lakhs.
Understanding the importance of an Indian Will for NRIs
Query: I am a Non-Resident Indian (NRI), settled in the US with my wife and children for a few decades. I also own movable and immovable properties in India, both self acquired and inherited. How should I plan to execute my Will in India, for devolution of my properties in favour of my family and repatriation to the US when required in future?
Reply: While you would have your own plans for execution of your Will in the US, as an NRI, you would be well advised for having a separate Will in India for the assets in India.
In this context, having Non-Resident Ordinary (NRO) Bank Accounts and Permanent Account Numbers (PAN) for your family members, who would be beneficiaries under your Will would be necessary. Ensure having names of such beneficiaries either as joint holders or nominees under your bank accounts, securities and other properties. This would facilitate smooth transfer and effective repatriation of funds, when required by them in future. Your Will in India will also help your legal heirs to explain their source of acquisition of assets and subsequent remittances for US tax purposes.
