What are the capital gains tax rules when an NRI sells agricultural land?

First, a key point: not all agricultural land is taxed on sale. 'Rural' agricultural land that meets the distance and population conditions in the tax law is not treated as a capital asset, so its sale may not attract capital gains tax at all. But agricultural land that falls within notified urban or semi urban limits is a capital asset and capital gains tax applies. For an NRI selling such taxable land that was inherited, the holding period is counted including the period the previous owner held it, and the cost is generally taken as the previous owner's cost (or the fair value as on the law's base date if older). If held long enough it is long term capital gains, usually with indexation benefit, taxed at the applicable rate. The buyer typically deducts TDS from an NRI seller, often at a higher rate, which you later adjust when filing. You may be able to save tax by reinvesting in specified bonds or another house property within the conditions. This is genuinely complex for NRIs, so compute it with a CA before you sell, and check whether your land is rural or urban for tax. General information only.