NRIs can purchase farmland by way of inheritance

I’m a US citizen residing in India. For the monetary 12 months 2020-21 (the evaluation 12 months 2021-22), I shall be submitting my taxes as a resident and ordinarily resident (ROR). As a end result, my US revenue shall be taxable. In April 2020 and January 2021, I acquired financial reduction fee from the US authorities as a reduction measure to all US residents as a result of coronavirus pandemic. These funds got here as revenue tax refunds by way of the IRS (Internal Revenue Service), which is equal to the Central Board of Direct Taxes (CBDT) in India. These funds won’t be thought-about as revenue of taxpayers within the US by the IRS. My query is how will this fee be handled by the CBDT? If the CBDT considers this as revenue, then I’ll present this as revenue whereas submitting my return for the evaluation 12 months 2021-22. But if the CBDT doesn’t think about it as revenue just like the US authorities, then I cannot add this with my revenue for the evaluation 12 months 2021-22. Would these reduction funds qualify as exempt revenue beneath Section 10(10BC) of the I-T Act?

—Name withheld on request

As you qualify as a resident and ordinarily resident (ROR) in India for the monetary 12 months 2020-21, you may be taxed on the worldwide revenue in India, and you’re required to report all overseas property within the India revenue tax return. Also, the revenue earned from such overseas property throughout the related 12 months together with the character of revenue and head of revenue beneath which such revenue has been supplied to tax within the India revenue tax return must be reported in relation to every overseas asset.

Nothing is prescribed within the India revenue tax regulation with respect to taxability of abroad financial reduction, however because the receipt is from the federal government as a welfare subsidy on account of the covid-19 pandemic, it might be arguably claimed as not liable to tax as per paragraph 5.2 of the CBDT round No. 19 dated 27 November 2015. Nevertheless, it might be advisable to report it as overseas revenue claimed as exempt from tax in your India revenue tax return.

My brother has migrated to the US and is a citizen there. We are three brothers. My father owns agricultural land and needs to divide it among the many three of us. Can my brother, who’s a US citizen, inherit agricultural land?

—Name withheld on request

Under the alternate management regulation, non-resident Indians or overseas passport holders are prohibited from buying agricultural land in India. However, as an exception, a non-resident Indian (an individual resident outdoors India who’s a citizen of India) or an Overseas Citizen of India (OCI) cardholder can purchase any immovable property in India (together with agricultural land) by the use of inheritance from an individual resident in India.

Assuming your brother is an OCI cardholder, and your father is an individual resident in India, your brother might inherit agricultural land out of your father. However, your brother will have the ability to switch such agricultural land solely to an individual resident in India.

Sonu Iyer is tax accomplice and other people advisory companies chief, EY India.

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