Can NRI Sell Inherited Property in India?

Inheritance or succession commonly describes the distribution of assets to another person or people upon the death of an individual. But, can NRI sell inherited property in India? Yes, a Non-Resident Indian or NRI can sell inherited property in India. The Foreign Exchange Management Act (FEMA) and the Income Tax Act govern the process.

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Whom NRI Selling Inherited Property in India?

An NRI can sell inherited residential or commercial property to:

1. An Indian citizen (resident in India)

2. Another NRI or a Person of Indian Origin (PIO)

However, if the inherited property is agricultural land, a farmhouse, or a plantation, the sale can only be made to an Indian resident, not to another NRI or PIO.

If the property is sold within two years of inheritance, short-term capital gains tax applies (as per applicable income tax slabs). If sold after two years, long-term capital gains tax applies.

1. Double Taxation Avoidance Agreement (DTAA): If the NRI lives in a country that has a DTAA with India, they may get tax relief.

2. NRIs can repatriate up to USD 1 million per financial year from the sale proceeds, subject to tax compliance and certificate from a Chartered Accountant (Form 15CA & 15CB).

I hope your query regarding the NRI selling inherited property in India tax is resolved.

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Can OCI Inherit Property in India?

If you are an

NRI selling inherited property in India then you need not worry.

As an NRI (Non-Resident Indian), you can sell inherited property in India. Let’s explore the details:

1. Tax Implications:

   • There are

     no taxes on inheritance of property

     for NRIs.

   • Capital gains tax applies only when the inherited property is

     sold

     .

   • The tax laws specifically exempt assets received through inheritance.

2. Options for Dealing with Inherited Property:

   • Continue Ownership

     :

     • You can choose to

       retain ownership

       of the inherited property.

     • No taxes apply if you own only one property in India and keep it vacant.

     • If you own multiple properties, one will be treated as self-occupied, and others will be deemed to be let out (with notional rent taxed).

   • Rent Out the Property

     :

     • Renting out the inherited property generates

       taxable rental income

       .

     • The tenant may deduct tax at source (31.2%), or you can pay taxes while filing returns.

   • Sale or Gift

     :

     • You can

       sell

       the inherited property to a resident Indian, another NRI, or a PIO (Person of Indian Origin).

     • Alternatively, you can

       gift

       it to a relative (resident, NRI, or PIO).

     • If gifting to a non-relative, the recipient pays tax on the market value of the property received.

3. Repatriation of Funds:

   • When selling the property, consider rules for

     repatriation of funds

     from India.

   • Under FEMA Section 6 (5), you may need

     RBI permission

     to take profits from selling an inherited property out of India.

This is also applicable for US citizen selling inherited property in India.