There’s no bar on NRIs/PIOs inheriting agricultural land in India

I am a US citizen with a people of Indian origin (PIO) card and will be applying for overseas citizenship of India soon. What are the rules on inheriting agricultural land in India? My parents own agricultural land in India and an apartment, which they want to bequeath to us.   
— Bala Rapaka
Non-resident Indians (NRIs) and PIOs cannot purchase fresh agricultural land. However, there is no restriction on them inheriting agricultural land. Also, since India does not impose inheritance tax, the event of inheritance, per se, will not attract any tax. When such land is sold, capital gains tax will be payable. After paying the tax or making any tax-saving investment if so desired, the net sale proceeds may be remitted abroad with a ceiling of the equivalent of $1 million per financial year. The same is true in the case of the apartment.

I live in the US and have lately started investing in India. However, I am not very clear about the tax incidence on various investments. Can you elaborate on Indian taxation on bank interest? When I was in India, I used to file Form 15GH to save tax deducted at source. Can the same be done even now to save the substantial TDS that the bank has been deducting? Similarly, what is the tax position with respect to mutual funds and investments in property? Once tax is paid in India, will I be liable to pay tax here also?   
— Narang
1. The interest on NRO account is subject to TDS. The facility of filing Forms 15G and 15H (for senior citizens) is available only to residents and not to NRIs.
If the tax liability is less than the TDS, the only practical way to get the refund is to file the tax return.
2. In the case of mutual funds, tax depends upon whether the mutual fund is equity-oriented or not. Equity-oriented mutual funds are those where the investments are 65% or more in domestic equity shares. Long-term capital gains on equity oriented mutual funds are tax-free, whereas short-term capital gains are taxable at the rate of 15%.
For non-equity-oriented mutual funds, long-term capital gains are taxable @20% after reducing indexed cost or at 10% after reducing actual cost without indexation, whichever is lower.
Long-term capital gain will arise if the holding period is over 12 months; else the gain is short-term in nature.
All dividends from mutual funds are tax-free. However, there is a dividend distribution tax of 12.5% applicable on dividends distributed by non-equity oriented mutual funds.
3. For property to qualify as a long-term asset, the holding period has to be over 36 months. On long-term gains from property, the tax rate would be @20% after reducing indexed cost from the sale proceeds. The option of 10% (as is available in the case of non-equity MFs) is not available.
Note that just as the global income of a resident Indian is taxable in India (with DTAA relief), the global income of an NRI may be taxable in his host country. Legally, we can answer queries pertaining only to Indian tax laws and regulations. We cannot comment upon the taxability in any other country or jurisdiction. Kindly get this information from a consultant specialising in tax laws of your host country.

— The writer is director, Wonderland Consultants, a tax and financial planning firm. He may be reached at sandeep.shanbhag@gmail.com