Why Financial Planning?

Planning is bringing the future into the present so that you can do something about it NOW.

Once upon a time, a young NRI named Vikram dreamed of reconnecting with his roots. Born and raised in a bustling metropolis abroad, Vikram often found himself craving for the simplicity and serenity of his ancestral village near the river Godavari.

Driven by a desire to invest in something meaningful and tangible, Vikram began researching the possibility of purchasing agricultural land in India as an NRI. Does this story sound familiar?

A lot of NRIs want that after retirement they have their own farmhouse in a small town but Can an NRI buy agricultural land in India?

Be it financial investments or property rules are a bit different for NRIs.

The rules related to transactions in  NRI agricultural lands, plantation properties, and farmhouses are different as compared to those related to residential and commercial property.

Can NRI buy agricultural land in India
NRI can buy agricultural land in India

Also Check: Should NRIs Get A Life Insurance Cover In India?

Can NRI Buy Agricultural Land in India

Under the Foreign Exchange Management Act and the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2018, NRIs and OCIs are not allowed by law to purchase lands or plantation property, or farmhouses in India unless they acquire special permission from RBI.

But when we tell this to NRIs they ask creative questions like – NRI wife can buy agricultural land in India? Can OCI buy farmland in India? The answer is simple – same as above.

Inheritance of Agricultural Land for NRI

NRIs or OCI can acquire agricultural land, plantation property, or farmhouse through inheritance from a family member residing in India. An NRI can also inherit property from another NRI. But this is subject to certain regulations like RBI’s approval.

Must-Read – Rules for OCI cardholders

Gift of Agricultural Land for NRIs

There is no restriction for NRIs and OCIs to get NRI agricultural lands, plantation property, or farmhouse as a gift from a person resident in India. (but consider the Benami act)

“But an NRI or OCI cannot gift such property to another NRI. An NRI has to gift it to a resident citizen of India.” wiseNRI

Sale Of Agricultural Land 

NRIs can sell agricultural land, plantation property, or farmhouse property provided the buyer is a citizen of India and resides in India. If the NRIs have purchased such lands with permission from RBI, they require approval from RBI to complete a sale transaction.

The sales proceeds can be remitted to an NRO account. The amount up to a maximum of US$ 1,000,000 can be repatriated. The repatriation process requires some documentation. The bank requires the submission of Form 15CA and Form 15CB, Will, legal heir certificate, and death certificate (in case of inheritance), and sale agreement (in case of sale).

Also Check: New Tax Rules for NRI in India

Taxation On Agricultural Land for NRI 

Rural agricultural land is not a capital asset hence capital gains tax is not applicable. However, if the agricultural land is defined as urban agricultural land, it is chargeable under capital gains tax.

buy agricultural land in india
can nri buy agricultural land in india

Also Check: 10 Best Investment Options For NRIs

Benami Transactions – NRIs

An NRI cannot buy agricultural land in the name of another person unless that person is a spouse, brother, sister, or lineal ascendant or descendant. It will be considered a Benami transaction which is illegal. (please consult a good lawyer as our knowledge is limited in this)

An NRI gives money to a friend or a son-in-law. This person uses the money to buy land, and the gains from that land are passed to the NRIs.  This is a Benami transaction, and the persons involved in it are punishable by law.

Land transactions can be tricky. The rules are different in different states. It might be difficult to have updated information as an NRI or OCI who is not always present in India. You have to research and understand factors like the legitimacy of land, compliances to be followed, etc. at the time of a property purchase and understand the rules for selling. It might be better to consult a real estate lawyer before entering into the transaction.

How to get RBI permission to buy agricultural land by NRI?

Yes, it’s a common practice but a long and difficult process.

Requests for the acquisition of agricultural land, plantation property, or farmhouse by individuals residing outside India or foreign nationals should be directed to The Chief General Manager, Reserve Bank of India, Central Office, Exchange Control Department, Foreign Investment Division (III), Mumbai 400 001.

The acquisition and transfer of immovable property by Indian residents outside India and non-residents in India are regulated under sub-sections (3), (4), and (5) of Section 6 of the Foreign Exchange Management Act, 1999 (FEMA), along with Notification No. FEMA 7(R)/2015-RB dated January 21, 2016, and Notification No. FEMA 21/2000-RB dated May 3, 2000. These regulations are periodically amended to reflect changes in the regulatory framework and are communicated through amendment notifications.

Information shared by a reader:

Application to be submitted by NRIs to the FEMD and not ECD please . After FEMA has replaced, Exchange Control Act the dept name was modified as Foreign Exchange Management Dept please.

Check – NRI investments in Commercial property.

Should NRIs consider investing in fractional ownership companies to purchase agricultural land in India?

Jason Jewig, a renowned financial author, famously wrote, “If you want to get rich, sell lies to people who want to hear those lies.” Consequently, several companies are raising funds from NRIs to invest in agricultural land in India. However, the legality of such investments is debatable. SEBI recently banned one such platform. Therefore, my suggestion is not to play with fire and instead adhere to the rules and guidelines issued by RBI and SEBI in this regard.

If you have any questions or you are aware of NRI agricultural land issues – add them in the comment section.

Published on February 12, 2024

Hemant Beniwal

Hemant Beniwal is a CERTIFIED FINANCIAL PLANNER and his Company Ark Primary Advisors Pvt Ltd is registered as an Investment Adviser with SEBI. Hemant is also a member of the Financial Planning Association, U.S.A and registered as a life planner with Kinder Institute of Life Planning, U.S.A. He started his Financial Planning Practice in 2009 & is among the first generation of financial planners in India. He also authored Bestseller book "Financial Life Planning". 

  • Hi Hemant,

    I bought a farm land in 2006-2007 in India while I am in abroad on work visa and Citizen of India ( on India passport). Few years later I acquired foreign citizenship . now am I legal to possess this farm land? could you please help explain.

    • Hey Tiara,
      NRIs were allowed to buy agricultural land in India, provided they met specific criteria such as having Indian citizenship, being of Indian origin, or having a source of agricultural income in India.

    • Hi Raji,

      Collect as much information as possible about the alleged violation. Contact the local revenue or land authorities in the state where the property is situated.

    • Hi B.R. Choudhary,

      NRIs were allowed to buy agricultural land in India, provided they met specific criteria such as having Indian citizenship, being of Indian origin, or having a source of agricultural income in India.

  • I am indian citizen living in Australia on dependent 482 visa from last 3 years. Can I buy agricultural land in India at my mother’s maiden place ?

    • Hi Snehal,

      Indian citizens living abroad on a dependent visa like the 482 visa in Australia, are generally allowed to purchase agricultural land in India. However, there are specific regulations and restrictions imposed by the Indian government on the acquisition of agricultural land by foreign citizens.

    • Hey Tanmay,
      Yes, a friend who owns urban agricultural land in India can sell it to an Indian citizen. There are no restrictions on selling urban agricultural land to Indian citizens as long as it complies with the local laws and regulations governing property transactions.

  • Can an OCI have the agriculture inheritance land from parents.
    If yes what is the process to do so in Punjab Ludhaina india

    • Hey Surjeet narindra,
      OCIs (Overseas Citizens of India) are not eligible to acquire agricultural land in India, including through inheritance. Only Indian citizens are generally allowed to own agricultural land. However, OCIs can inherit agricultural land if they acquire it through a will or intestate succession (when there is no will) from their parents or other relatives. In such cases, they have the option to transfer ownership to an eligible resident Indian or sell the land.

    • Hello Jas,
      No, OCI cardholders are not eligible to inherit agricultural land in India, whether it is from a brother or sister or any other relative.

  • I bought agricultural land in Bangalore in 2021 without knowing about FEMA laws . What should I do to avoid complications . Thank u

  • I and my brothers are all NRIs. We inherited some agricultural land when our father died. Now my brothers want to give their share of the land to me. Can I inherit it from them?

    • Hi Sukhpal,
      As an NRI, you are allowed to inherit agricultural land in India from your father, but as per FEMA regulations, you cannot inherit agricultural land from your brothers who are also NRIs. An NRI cannot gift such property to another NRI. An NRI has to gift it to a resident citizen of India.

  • I have agriculture land in chhattisgarh in rural area which was purchased by me in 1998. I am now USA citizen and OCI holder. Can I sell this land in chhattisgarh and buy land in Punjab with this money?

    • Hi Palwinder
      As an OCI holder, you are eligible to purchase agricultural land in India, subject to certain restrictions. However, the rules for selling agricultural land in India are different for each state, and may also depend on the type of land (i.e. irrigated or non-irrigated), the location, and the purpose of sale.
      In the case of Chhattisgarh, the sale of agricultural land to a person who is not a resident of the state is generally prohibited under the Chhattisgarh Land Revenue Code, 1959. However, there may be certain exceptions to this rule, such as if the land is being sold to a non-resident Indian or an OCI holder for agricultural purposes. You would need to consult with a local lawyer or the relevant authorities in Chhattisgarh to determine your eligibility to sell the land.
      Assuming that you are able to sell the land in Chhattisgarh, you can use the proceeds from the sale to purchase land in Punjab, provided that the land you wish to purchase is not agricultural land. Non-agricultural land, such as residential or commercial land, can be purchased by an OCI holder without any restrictions.
      I Hope it Helps! 🙂

  • Hello Sir,
    myself & my wife (Both NRI) registered as partnership firm to buy agriculture land in order to convert the same to non-agriculture with intent to build resort. Can we do so?

    • Hi Raj,

      I am not a tax expert but my understanding is as NRIs, you and your wife are allowed to register a partnership firm in India and purchase agricultural land for the purpose of converting it to non-agricultural land and building a resort.

      However, you will need to obtain the necessary approvals and permissions from the relevant authorities before you can proceed with the purchase and development of the land.

      You will need to obtain a “No Objection Certificate” (NOC) from the state government’s Department of Agriculture, stating that the land is suitable for conversion from agricultural to non-agricultural use. You will also need to obtain permission from the local panchayat or municipality to use the land for non-agricultural purposes.

      In addition, you will need to comply with all other applicable laws and regulations, such as building and environmental regulations, in order to proceed with the development of the land.

      It is advisable to consult a lawyer or a professional in real estate to ensure that you are in compliance with all the necessary regulations and to assist you with the process of purchasing and developing the land.

    • Hi JK Sharda,

      As an NRI, you can sell agricultural land in India that you had acquired before becoming an NRI. However, there are certain rules and regulations that you need to follow to sell the agricultural land in India:
      1. NRIs are required to obtain prior approval from the Reserve Bank of India (RBI) to sell agricultural land in India.
      2. You will also need to ensure that all taxes related to the agricultural land sale are paid and that all documentation and legal formalities are completed.
      3. If you make a profit on the sale of the agricultural land, you will be liable to pay capital gains tax.
      4. You will need to have an NRI bank account in India to receive the sale proceeds.

    • Hi Mahesh

      OCI card holders can purchase residential and commercial properties in India. But they are not permitted to purchase agricultural land, including farmland or any kind of plantation property.

  • What is the process of getting approval from RBI to get special permission for NRI to buy agricultural land? Do they give such permission easily? Normally how much time does it take to get the permission?

    • Hi uzzal kumar mudoi,
      NRI cannot purchase agricultural land in India
      You need RBI permission which would not be easily granted
      You can visit RBI website for details regarding authority to be approached for purchase of agricultural land

  • Hi there,

    I bought agricultural land in India when I was an Indian citizen and now I am a NZ citizen. What the tax implications of selling this agriculture land?

    • Hi Sim,
      As per my knowledge, Rural agricultural land is not a capital asset and hence any capital gains arising from its sale will be exempt from taxes. The treatment is the same for an NRI as well so on the sale of the land you will need not pay any taxes.

    • Hi fakhrunnisa,

      The requests for acquisition of agricultural land/plantation property/ farmhouse by any person resident outside India or foreign nationals may be made to The Chief General Manager, Reserve Bank of India, Central Office, Exchange Control Department, Foreign Investment Division (III), Mumbai 400 001

  • My daughter is staying at Texas – USA, she is planning for purchase for Agricultural land in Telangana, after purchase of agricultural property procedure of registration to her name

  • Same case with me What can I do now ? Please advice ..I am an nri with Indian citizenship and not knowingly bought an agricultural land. Value of the land is very less 2 lac inr but I spent a lot of money on doing the boundary’s etc .please guide what should I do next .. thanks

  • I also did not know about this rule and mistakenly bought an agricultural land . What can I do now ? Please advice ..it’s just been 2 months since I bought less than half acre land in jharkhand ..I am an nri with Indian citizenship..please guide what should I do next .. thanks

  • Hi, I am NRI from UAE, holding Indian Passport, can I gift my mother specific amount, and she in turn purchase agricultural land in her name, with that gifted amount. Kindly inform

  • Dear Sir, presently I am an Advocate by Name G. GOWRI SHANKAR from Sainikpuri,Secunderabad. One client approached me to buy the Agricultural land in Telangana, for guidance and with clarity with latest / present regulations on purchase of Agriculural land for a minimum of a FARM HOUSE as the said NRI took birth in INDIA and presently works in AMERICA , who had already become a AMERICAN CITIZEN, THOUGH HOLDING A pan card AND a AADHAR CARD wish to hold the immoveable property or the Agricultural land . PLEASE l do required a guidance in specific regulations for purchase of said Agr. lands. Thanks, Please Respond.and others reasons have not been asked to the said person.

  • my wife is indian with usa passport and has oic visa for india can she purchase agriculture land in india and can she also POA in my name so that io can sell land later and also get payment in my name or can she give me land as gift so i can sell it later i have india passport and has usa green card thaNKS please answer

    • There is no restriction for NRIs and OCIs to get agricultural land, plantation property, or farmhouse as a gift from the person resident in India.

      • I am not finding any data that NRI’s can get agricultural land in the form of gift from indian resident. Can you please share me an article from RBI or any other on this information.

  • This rule about NRI’s not able to buy agricultural land in India is in place after 2018 ? If so, what happens to the land purchased by NRIs before that ? Can they sell it anytime ?

    • Hii Surjeet
      NRIs and OCIs are not allowed by law to purchase lands or plantation property, or farmhouses in India unless they acquire special permission from RBI.

  • Hi My name is srujan i am a Indian living in Dubai I expected to buy agriculture land , i have sbi bank NRI account, how I can get loan, and how much I can get maximum, please let me know.

  • Hi i want to buy 3 acres of agricultural land in India I understand i have to inform RBI what are the conditions set by RBI i am prepared to pay any tax due on the transfer

  • I am OCI card holder, however i am living in India since last 8 yrs. Am i eligible to buy Farm House with land? I know that OCI card holder are not eligible to buy agricultural land and farm house land. However. does living in India since last 8 yrs makes us resident and allow us to buy Farm Land.

  • What if one buys agricultural land when he/she is residing in India and later years if they leave India and become an NRI?

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