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An NRI’s Guide to Purchase of Agricultural Land in India For NRIs, the purchase of a property in India requires the consideration of many tax and regulatory rules and implications regulated under the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000. While the government of India regularly devises new schemes to bolster foreign investments, and real estate is one of the most sought after investment arenas for Indian citizens who reside outside India, there are restrictions placed on certain immovable properties such as agricultural land, plantation property and farm house. Here are some pointers to keep in mind for NRIs wishing to acquire an Agricultural land/ plantation property/farm house in India:
No. For an NRI, buying agricultural land/plantation property/farm house in India is not allowed.* He cannot acquire such a property as a gift either. He can, however, acquire agricultural land/plantation property/farm house by the way of inheritance. Apart from agricultural land/plantation property/farm house, an NRI can acquire by way of purchase, any other immovable property in India.
NRIs who have acquired foreign citizenships can continue to hold ownership of their agricultural land/plantation property/farm house in India provided they had acquired them legally before accepting the citizenship of a foreign nation.
An NRI can inherit agricultural land/plantation property/farm house from a person who is a resident of India. An NRI can also, with the approval of the RBI, acquire agricultural land/plantation property/farm house through inheritance from a person who is resident outside India, provided the bequeather had acquired the property in accordance with the foreign exchange law or FEMA regulations, applicable at the time they purchased or inherited of the property.
An NRI can transfer agricultural land/plantation property/farm house acquired by inheritance only to Indian citizens permanently residing in India, by sale or as a gift.
Though there is no tax levied at the time of inheritance of agricultural land/plantation property/farm house by NRIs, in case they sell the property to an Indian citizen residing in India, capital gains tax on the sale proceeds will be levied. On payment of the tax, the earnings from the sale proceeds can be remitted abroad lest they exceed 1 million USD in any financial year.
To legally get agricultural land/plantation property/farm house converted to a residential or business land is cumbersome. Following pointers should be kept in mind:
1. Every state has its own regulations with respect to the conversion of agricultural land/ plantation property/farm house. Those rules should be considered before making any decision.
2. If an NRI inherits an agricultural land/plantation property/farm house that has already been converted to a residential or business land, they must cross check all the documentation with the appropriate municipal registration offices.
3. If an NRI converts an agricultural land/plantation property/farm house, he can only sell it to an Indian resident who is a citizen of India, after a certain period of time since the conversion takes place. Additionally, the land needs to be used for the purpose it was converted within a specified period of time lest the conversion becomes null and void.
*Though general permission to acquire agricultural land/plantation property/farm house in India is unavailable to NRI's, in special cases these proposals can be sent for approval to the Reserve Bank of India, the decision of which is made in consultation with the Government of India.
Procedure for Power of Attorney, Property Registration Process in India, Tips for NRI's Buying Property in India
Q: Are persons resident in India required to surrender foreign exchange acquired/held by them?
A: Yes. Residents receiving foreign exchange from abroad by way of gift, inheritance, remuneration for services rendered, etc. are required to bring it to India within three months acquiring the...
Q: Are Returning Indians permitted to acquire fresh foreign currency assets by remittance from India?
A: Yes, provided the funds for the purpose are drawn out of their Resident Foreign Currency Accounts
Source : Reserve Bank Of India
Q: Do resident donees or legal heirs require the Reserve Bank permission to receive or hold foreign currency assets by way of gift or inheritance from Returning Indians or from those holding assets since prior to July 8, 1947 with the permission of the ..?
A: No. Resident donees or legal heirs of the persons covered under the general permission/exemption granted by the Government of India can continue to maintain their foreign currency assets provided...
Q: What is the Resident Foreign Currency Account Scheme?
A: This is a Scheme drawn up by the Reserve Bank permitting Returning Indians to open foreign currency accounts with banks in India for holding funds brought by them to India. This facility replaces...
Q: Are OCBs required to produce any certificate regarding ownership / beneficial interest in them by NRIs?
A: Yes. In order to establish that the ownership/beneficial interest in any OCB held by NRIs is not less than 60%, the concerned body/ trust is required to furnish a certificate from an overseas...
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