Let’s assume that you are from India and hold a British or an American passport. Moreover, you are eligible to apply for citizenship in the respective country you are living in. But before acquiring citizenship, you may wonder about your investments in India. As a non-resident Indian (NRI), you might think if you could inherit either agricultural land or residential property from your domestic country. Before going ahead with the citizenship process in another country, know the below things regarding investments in India.
Well, if you have been staying in the UK for a long time, your residential status may already be of a non-resident for filing tax in India. Once you become an NRI, you cannot any longer maintain a resident bank account in India. As per the Reserve Bank of India (RBI) regulations, you must redesignate your resident bank accounts as NRO or NRE accounts. You could probably choose to merge balances in several accounts and continue only an NRO account which would make things easier to maintain and comply with various regulations regarding reporting and taxes. You can even consider opening an NRE account to deposit your foreign earnings in India. You, as an NRI, are likely to face some restrictions while investing in mutual funds, shares, etc. in India, as there could be additional compliance requirements. You cannot open a public provident fund (PPF) account; however, you can continue holding the investment in your existing PPF account until the scheme matures. But for that, first, you must convert your resident accounts to NRO, NRE or Foreign Currency Non Resident accounts.
For NRIs, any income that is drawn from India is taxable in the country. TDS shall be deducted on your capital gains before the amount is credited to your account.
To clarifying the doubt whether you as an NRI are allowed to acquire agricultural land in India, the answer is no. You cannot inherit agricultural land in India. However, an NRO who is an Indian citizen or holds overseas citizenship of India can acquire farming land or any immovable property in India from an Indian resident. It is also important to note that if you decide to sell such an asset, you are allowed to sell it to a person who holds Indian citizenship.
