Can NRI Sell Inherited Property in India?

NRIs are permitted to inherit any immovable property in India, including residential, commercial, agricultural land, farmhouses, or plantation property, from a resident Indian, under FEMA guidelines there's no requirement for RBI approval at the time of inheritance. But, can NRI sell inherited property in India? Once inherited, an NRI can indeed sell the property, whether while in India or from abroad, by either being physically present or using a legally valid Power of Attorney (PoA) to handle the transaction.

What are the Tax Implications of NRI Selling Inherited Property in India?

• When executing the sale of such inherited property, the ownership duration of both the inheritor and the previous owner is considered if combined holding exceeds 24 months, the gains are classified as long-term capital gains (LTCG).

• Typically taxed at a concessional rate with indexation benefits; otherwise, the gains are treated as short-term and taxed at ordinary slab rates.

• The buyer is required to deduct TDS on the sale proceeds at relevant rates subject to applying for lower TDS if actual tax liability is lower.

• Post-sale, the funds must be routed through the NRI’s NRO account, and repatriation is permitted up to USD 1 million per financial year (April–March).

• It is provided requisite documentation like Forms 15CA and 15CB and proof of inheritance are furnished; beyond this ceiling, prior RBI approval may be required.

NRIs can inherit and legally sell Indian property without prior permission, manage the transaction via PoA if necessary, incur capital gains tax based on combined holding period, facilitate buyer TDS compliance, and repatriate proceeds within regulated limits.

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.

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.