Q.1082 NRI bought agricultural

land . . .

Question: Hi Sir, I have read your blogs online regarding NRI property ownership in India. My husband and I are stuck with an issue explained below. Please help us. We are NRI's staying in USA (my husband since 2006 and myself since 2015). My husband remitted money to India through bank to my mother in law in past few years. My mother-in- law(MIL) bought an agricultural land (in Telangana) with that money which has been registered on her name then. Last year when we were in India on a visit, she did the gift deed to us. We had a plan of selling the land and repatriate the whole money to USA and buy a house here. We did not know that an NRI cannot acquire agricultural land by way of purchase or gift except by way of inheritance, until recently. We now have the following questions: 1) Does rejecting the gift deed save us from getting into any issues i.e giving the property back to my MIL? 2)Can my MIL sell the property by herself and then transfer the money to USA as gift? 3)How much amount can be transferred from India to USA as gift and will there be any tax implications? 4)Is it ok for my MIL to buy an agricultural land registered on her name with the money my husband sent her? 5) Can she sell the agricultural land and buy a residential/ commercial property with the sale proceeds? We will be very grateful to you if you can help us with this issue. Thanks Answer: Regarding your questions: 1. Gifts that involve immovable properties in India must be registered. Any immovable property gift that is not registered cannot pass to the Donne. It would be advisable to use the help of a lawyer to ensure the ownership stays with your mother-in-law. When finding a lawyer ensure you get someone trustworthy. 2. Yes, if your mother in law prefers, she can sell the property and do whatever she wants with the money. 3. The money she wants to send abroad must be in her bank account. Under the Liberalised Remittance Scheme [LRS] she can send up to US$ 250,000 per financial year to you or to her son. To send money under the LRS scheme no permission from the Reserve Bank of India [RBI] is required. There is no tax involved on gift. Kindly note that non-residents cannot send money abroad under the LRS scheme. This scheme is strictly for resident Indians. 4. Your mother-in-law can use the money sent to her by her son to buy agricultural land where Indian citizens can legally purchase agricultural land. Keep in mind that is some States of India only farmers can purchase agricultural land. In Telangana there are some prohibited categories of land that cannot be legally sold. It is up to the buyer to ensure they are in compliance of government laws and the seller is indeed the actual owner of the land being purchased. 5. Yes, she can sell the land and buy residential or commercial property with the sale proceeds. There are no restrictions on residential or commercial property.