An NRI cannot acquire or inherit agricultural land
Read on to find out what kind of property NRIs can acquire or inherit
I am a non-resident Indian (NRI) and my paternal aunt wants to gift agricultural land to me. It was inherited by her from my grandfather. What are the tax implications?
—Mukesh
Acquisition or transfer of immovable property by an NRI is regulated under the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000. As per the immovable property regulations, a person who is residing outside India but is a citizen of India or a person of Indian origin is allowed to acquire immovable property other than agricultural property, plantation or a farm house in India.
Acquisition of agricultural property by a person of Indian origin is permitted only through an inheritance from a person resident outside India who had acquired such property in accordance with the provisions of the exchange control regulations in force at the time of acquisition.
I am assuming that your aunt is a person residing in India and that the property is not being passed on through inheritance. So, you may not be able to acquire the agricultural property from your aunt as a gift.
Does an NRI have to pay tax on interest earned from deposits of foreign earnings?
—Hitesh Bhanot
I am assuming that you are a non-resident for taxation purposes. As a result, only income that’s received in India or is deemed to be received in India or income that accrues or arises in India or is deemed to accrue or arise in India is taxable in India.
Interest earned from deposits held outside India would accrue to you and be received outside India. Such interest on deposits held abroad would not be taxable.
The taxability of interest earned in India on deposits made out of your foreign earnings would depend on the type of account maintained in India with the authorized dealer bank. If you have maintained a deposit in a non-resident ordinary rupee account, then the interest income earned from such deposit would be taxable in India.
However, if you hold a non-resident external rupee account deposit, then the interest income arising from it would be exempt from taxes in India. Interest income earned from deposits maintained in foreign currency non-resident account is exempt from tax up to a period where you are a non-resident or a resident but not ordinarily resident.
The interest on Indian deposits will be chargeable to tax in India at slab rates applicable to you.
Also, depending on your tax residential status and the country where you are a resident, you may claim benefits, if any, under the double taxation avoidance agreement.
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First Published:27 Nov 2014, 07:47 PM IST
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