Manoj Mohapatra* lives in the United States. He is a US citizen with OCI card (Overseas Citizen of India). His parents own an agricultural piece of land in Andhra Pradesh in India.
They are keen to give this land to Manoj. However, Manoj is not sure whether he can inherit agriculture land since he is a US citizen.
India’s laws governing investment by NRIs are governed by Foreign Exchange Management Act. The law prohibits NRIs and PIOs (non-resident Indians and Persons of Indian Origin) from buying agricultural land in India.
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Also read: NRIs can buy property in India
However, there’s good news. This law does not prohibit inheritance of agriculture land by NRIs or PIOs.
And some more good news. There is no inheritance tax. Also, NRIs can sell the inherited agricultural land to a resident Indian.
However, they will have to pay capital gains tax on the sale proceeds.
Once this tax is paid, the remaining sale proceeds can be remitted abroad. Such remittance should not exceed US$1 million in any financial year.
This rule also applies to any other property inherited by NRIs or PIOs.
* name changed on request.
(Satyajit Banerjee is a Calcutta-based accountant specialising in NRI accounting. This article is for information only. Please consult an accountant for professional advice.)
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