I live in India and own several properties, including agricultural land. My children are settled abroad and hold OCI (Overseas Citizenship of India) cards. I understand there are restrictions on non-residents acquiring agricultural land in India. How can I ensure they inherit this land after my lifetime?
– Name withheld on request
To pass on agricultural land to your children, you can execute a Will bequeathing the properties to them. However, certain legal constraints need to be considered.
As a general principle, non-resident Indians (NRIs) and OCIs are allowed to inherit agricultural land from a resident Indian under the Foreign Exchange Management Act, 1999 (FEMA) and related rules. This is an exception to the broader restriction on non-residents purchasing agricultural land in India or receiving it as a gift.
That said, state-level laws may impose additional limits. Some states restrict transfers of agricultural land from an agriculturist to a non-agriculturist. For example, courts have held that under the Maharashtra Tenancy and Agricultural Lands Act, 1948, such transfers, including through a Will, require prior approval from the relevant authority.
Your query does not specify whether your children qualify as agriculturists. If they do not, it would be prudent to seek legal advice before finalising your Will. Notably, these restrictions apply regardless of whether the heirs are resident Indians or non-residents.
Post-inheritance, further constraints apply if your children choose to transfer the land. Under FEMA, NRIs and OCIs can transfer agricultural land only to a person resident in India. In addition, state laws may restrict transfers to non-agriculturists.
Further, sale proceeds can be repatriated abroad from an NRO account only up to $1 million per financial year; any higher amount requires approval from the Reserve Bank of India.
Given these limitations, you may consider alternatives. One option is to sell the agricultural land during your lifetime and bequeath the proceeds. Another is to explore converting the land to non-agricultural use, subject to local regulations.
In all cases, it is advisable to seek professional guidance tailored to your specific circumstances when preparing your Will. This response assumes you are not Muslim; if you are, additional rules may apply to the portion of property that can be bequeathed.
Shaishavi Kadakia is a partner and Tejas Chhura is an associate at Cyril Amarchand Mangaldas, Mumbai.
