In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
In this fatwa:
There is nothing in the teachings of Islam to suggest that expression “innaa lilaahi wa innaa ilayhi rajiun” is reserved for Muslims alone. Therefore, it can be said on hearing the news of the passing of non-Muslims.
Responding to your question, Sheikh Ahmad Kutty, a senior lecturer and Islamic scholar at the Islamic Institute of Toronto, Ontario, Canada, states:
The words innaa lilaahi wa innaa ilayhi rajiun mean we belong to Allah and return to Him.
Therefore, it is stating a truth no one can deny that everyone who is living, Muslim or non-Muslim or any living being for that matter, are created by Allah, and ultimately we all must return to Him.
Thus it serves as a reminder for us to look at life and death as they are: manifestations of the Divine Power.
Allah tells us in another place in the Quran:
“There is no animal crawling on earth nor yet a bird on the wing, but forms communities like you. We have not neglected anything in the Book, and they will ultimately be gathered to their Lord.” (Al-An`am 6: 38)
Therefore, there is nothing in the teachings of Islam to suggest that the above invocation or expressions reserved for Muslims alone.
Almighty Allah knows best.