The Reserve Bank of India (RBI) has given general permission to NRIs to acquire property in India. However, it does not mean that NRIs can buy any type of property. NRIs can only purchase commercial and residential properties in India. This also is subject to specific rules, and taxation applies to the purchase of property in India by NRIs.
Regarding agricultural land, NRIs are NOT allowed to purchase agricultural land, farmland, farmhouses, or plantations in India.
So, to simply answer the question “Can NRIs buy agricultural land in India?”, the answer is a straight no.
However, this gives rise to other questions…
Can NRIs get agricultural land by gift?
The answer to this, too, is no. NRIs cannot acquire agricultural land in India even by gift. While other types of properties can be acquired by the way of gift, this is not so for agricultural land.
Can NRIs inherit agricultural land in India?
Inheriting agricultural land is the only way NRIs can own agricultural land in India.
From whom can NRIs inherit agricultural land?
NRIs can inherit agricultural land, farmland, farmhouses, and/or plantations in India from a resident of India only.
If NRIs inherit agricultural land from a non-resident of India, the approval of the RBI is necessary. Also, the owner of the agricultural land should have been a citizen of India while buying or inheriting the property. It should also be in accordance with FEMA or other relevant laws at that time.
What can NRIs do with inherited agricultural land in India?
NRIs are allowed to transfer the ownership of the agricultural land by gift or by sale, but only to a permanent resident of India.
In the case of the sale of the inherited agricultural land, there will be tax implications, as well.
Tax implications for NRIs selling inherited agricultural land in India
While NRIs don’t have to pay any tax on the inheritance of agricultural land, it will need to be paid on the sale.
Capital gains tax is levied on the sale proceeds in such transactions. The earnings from such sales can only be remitted abroad after the payment of the due taxes.
Can the inherited agricultural land be converted to commercial or residential land?
NRIs can get the conversion done to commercial or residential land after inheriting agricultural land in India.
However, converting agricultural land to commercial or residential land is, in itself, a lengthy and time-consuming process. It becomes all the more complicated in the case of NRI agricultural land ownership.
The applicable policies also differ from state to state. It is best to reach out to the concerned authorities to understand the procedure.
An important point about converting agricultural land to commercial or residential land is that the converted property can only be sold to Indian citizens. And the sale can take place only after a certain period of time following the conversion.
Also, you need to ensure that the land is specifically used for the purpose for which it was converted within a certain period of time.
Note – NRIs can also inherit agricultural land that has already been converted before inheritance. It is best to get all the documentation checked in such cases.
If you desire to acquire agricultural land through means other than inheritance, you can send a proposal to the RBI. This, however, is only applicable in special cases. A decision will be made after consultation with the Government of India.
How useful was this post?
Click on a star to rate it!
We are sorry that this post was not useful for you!
Let us improve this post!
Tell us how we can improve this post?
As a seasoned expert in the field, I'd like to delve into the comprehensive details provided in the article about the Reserve Bank of India's regulations regarding Non-Resident Indians (NRIs) acquiring agricultural land in India.
The Reserve Bank of India (RBI) has granted general permission for NRIs to acquire property in India, focusing on commercial and residential properties. This isn't a blanket approval, as specific rules and taxation implications apply. The noteworthy point here is that NRIs are explicitly prohibited from purchasing agricultural land, farmland, farmhouses, or plantations in India.
The article rightly emphasizes that NRIs cannot acquire agricultural land in India through gifts, a unique aspect compared to other property types. However, they can inherit agricultural land, farmland, farmhouses, or plantations in India from residents of India. In the case of inheritance from non-residents, approval from the RBI is necessary, and the original owner must have been an Indian citizen during the acquisition, adhering to FEMA and relevant laws.
NRIs are permitted to transfer ownership of inherited agricultural land either through gift or sale, but only to permanent residents of India. The article succinctly notes the tax implications for NRIs selling inherited agricultural land, pointing out that capital gains tax is applicable, and the remittance of earnings abroad is allowed only after fulfilling tax obligations.
An important aspect covered is the potential conversion of inherited agricultural land to commercial or residential land. However, the conversion process is highlighted as intricate, varying across states, and subject to specific policies. Furthermore, the converted property can only be sold to Indian citizens after a specified period following the conversion. The time-consuming nature of this process, particularly for NRI agricultural land ownership, is duly acknowledged.
The article also acknowledges that NRIs can inherit agricultural land that has already been converted, with a prudent reminder to verify all documentation. Additionally, for those desiring to acquire agricultural land through means other than inheritance, a proposal to the RBI is an option, albeit applicable in special cases and subject to consultation with the Government of India.
In conclusion, the article provides a comprehensive overview of the regulations governing NRIs' acquisition and ownership of agricultural land in India, covering aspects from inheritance to taxation and conversion processes. It's a valuable resource for individuals seeking clarity on this complex matter.
