Q.1089 NRI selling inherited

agricultural land

Question: Dear Sir, I am an NRI and live in Singapore since approximately 3.5 years I do not have citizenship of any other country . I have agricultural land which was bought at the time I was a resident of India and also have inherited agricultural land from my grandparents during the 3.5 years duration Currently I am residing in India since July and intend to be here for at least 185 Days. During this tenure, i still hold employment with my employer in Singapore. Will I be considered a resident of India for this financial year? Pls guide if I can sell the agricultural land to a resident of India as I am in India for about 185 days. Can i, in this financial year, use these funds to buy another agricultural land and hence save on Tax? The land is inside 8kms from the city and would be considered as agricultural land . the agricultural land is in Haryana province. Regards Answer: Regarding your questions: • Staying in India more than 182 days makes an individual resident for tax purposes. The financial year in India starts from April 1st and ends on March 31st. You should be able to calculate whether you are a resident depending on day you entered India. Those who become tax residents of India must pay taxes in India either on their income from Indian sources OR their worldwide income depending on the residency status they fall under. Residency status is calculated based on the time spent in India and abroad. More information on residential status is available at: http://nriinformation.com/nri_guide/tax_ resident_india.htm • You can sell the agricultural land you own to another Indian citizen who is resident in India, not an NRI. • You cannot buy other agricultural land. NRIs can only acquire agricultural land by way of inheritance

Sale of agricultural land may be

exempt from capital gains tax?

In some cases the sale of agricultural land may not be taxed as capital gains. Agricultural Land in Rural Area is not considered to be a capital asset in India. Rural area is generally considered to be an area: • That is outside the jurisdiction of a municipality/cantonment board having a population of 10,000 or more but less than one lakh. [At least 2 kilometers measured aerially] • At least 6 kilometers if the population of the municipality/cantonment board population is more than 1lakh but not more than 10 lakh. • At least 8 kilometers if the population of the municipality/cantonment board population is more than 10 lakh. Readers are strongly advised to seek the guidance of a tax professional or accountant in matters of taxation and purchase/sale of real estate. No website! including this website, is a substitute for professional services. Using the services of a professional lawyer, tax advisor or chartered accountant will in the long run save you time and money. This website does not recommend any particular professional, you need to do your own research and decide who you wish to seek help from.