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NRI Buyer’s Essential Land Checklist: 10 Mandatory Checks Before Buying Land in India10 Common Mistakes First-Time Land Buyers Make — and How to Avoid Them
Buying land is one of the most important financial decisions many people make — especially first-time buyers. Land can be a great investment or a future home site, but it also has unique risks that many buyers overlook.
Here’s a simple guide to the 10 most common mistakes first-time land buyers make — and how to avoid them.
1. Inadequate Title Verification
Many purchasing individuals regard the seller's word as sufficient. Nevertheless, incorrect details about ownership, disputes, and/or unsecured documentation could cause future problems.
It’s always important to ensure the title of the land being purchased is valid.
There must be no pending lawsuits or claims, and the ownership must be cleared.
2. Ignoring the Authorisation of the Government
The buyers may overlook the verification of Government approvals for the use of the land. The land may be set for acquisition, reserved, or withheld for future use by the Government.
Ensure that you have the necessary approvals, such as RERA, Layout Sanction, and Land Use Permission, before signing.
3. Overlooking Land Use and Zoning
Different land types have different uses: agricultural, residential, commercial, etc. Mistaking one for another can cause major issues.
Confirm the land’s zoning and permitted use with local authorities.
4. Failure to Check the Encumbrance Certificate
The EC reveals whether there are any loans, mortgages, or disputes associated with the property. Failure to investigate this aspect might bring unexpected purchases.
One should always ask for an Encumbrance Certificate that is at least 10-15 years old.
5. Falling for Low Price Traps
Even if the land is cheap, if it lacks approval, title, and connectivity, it may become a source of even greater losses.
Compare local rates to ensure the offer does not sound "too good to be true."
6. Not Visiting the Land in Person
Relying solely on photos or maps can be dangerous. Photos don’t show the exact condition, access roads, encroachments, or surrounding development.
Visit the land multiple times at different times of day.
7. Skipping Soil and Survey Reports
The soil type and ground condition matter — especially if you plan to build a home. Poor soil quality can increase construction costs dramatically.
8. Disregard of Access and Connection
A plot without a proper road, streetlights, and reliable connectivity to all key places quickly loses value.
Check road access, nearest highways, water supply, and public transport.
9. Not Budgeting for Hidden Costs
Purchasing land involves more than just the sale price. You have to consider stamp duty, registration fees, brokerage, conversion charges, taxes, and verification of documents.
Prepare a complete budget that includes all additional costs.
10. Not Taking Legal or Expert Help
Many first-time buyers try to handle everything alone. But land law and property documentation can be tricky.
Consult a lawyer or genuine Plots before closing the deal.
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INDIA’S LAND BOOM: THE BIG PICTURE
Non-Resident Indians (NRIs) are increasingly looking at non-agricultural (NA) plots in India as a stable and high-growth investment. These lands are legally approved for residential or commercial use, making them far more accessible to NRIs than agricultural properties.
But what exactly can an NRI buy? What rules apply? And how can you safely complete the purchase from abroad?
Here’s a simple guide.
1. NRIs Can Buy NA (Non-Agricultural) Land Without Special Permission
NRIs are allowed to buy non-agricultural land in India.
No special approval from the Reserve Bank of India (RBI) is required.
This includes:
- Residential NA plots
- Commercial NA plots
- Approved layouts in township or plotting projects
NA land is fully legal for NRI purchase and is treated the same as buying residential/commercial property.
2. Payment Rules for NRIs Buying NA Plots
NRIs must follow banking rules under FEMA. Payments can be made only through:
- Inward remittance from abroad
- NRE account
- NRO account
- FCNR account
- Cash payments are not allowed.
This creates transparency and helps with future repatriation of funds.
3. Properties NRIs Cannot Buy
NRIs are restricted from buying:
- Agricultural land
- Farmhouses
- Plantation land
These can only be owned if the NRI inherits them or receives them as a gift.
So, for new purchases, only NA land is allowed.
4. Power of Attorney (POA) Helps If You’re Abroad
If the NRI is not in India during the transaction, they can give a Power of Attorney to a trusted relative, friend or a professional representative.
The POA holder can legally carry out tasks like signing agreements, completing paperwork, and handling registration formalities.
5. Legal Due Diligence: The Most Important Step
Before buying any NA plot, NRIs must confirm that the land is officially converted from agricultural to non-agricultural by the authorities.
✔ Title and Ownership
Check title deeds to ensure the seller has the legal right to sell.
✔ Encumbrance Certificate (EC) for 30 Years
This confirms the land is free from legal disputes or loans.
✔ Approvals & NOCs
Look for:
- Layout approval
- Local authority permissions
- Tax receipts
- Completion certificates (if applicable)
- A clean plot saves you from trouble later.
6. Repatriation Rules: What Happens When You Sell?
When an NRI sells an NA plot:
- If purchased using NRE funds
- The original investment amount can be repatriated abroad in foreign currency.
- If capital gains are earned
- The profit must first be credited to an NRO account.
- Repatriation is allowed but within RBI limits.
- If purchased using NRO funds
Repatriation is limited to USD 1 million per financial year, including all assets and income.
7. How Non-Resident Indians Purchase a NA Plot in India
Step 1: Verify that the land is NA
Step 2: Designate a POA (useful but optional)
A general power of attorney facilitates the process.
Step 3: Conduct exhaustive due diligence
To verify documents, approvals, and land history, speak with a legal professional.
Step 4: Put a Sale Contract into Action
This needs to be signed and stamped by the POA holder or both parties.
Step 5: Transfer money through approved channels.
Use NRE/NRO/FCNR accounts or inward remittances.
Step 6: Register the sale deed
To complete ownership, pay stamp duty and registration charges.
Conclusion
Buying NA plots is one of the simplest and safest real estate investments that NRIs can make in India. With no need for special RBI approval and clear guidelines under FEMA, NA land offers strong potential for appreciation, development, and future returns.
As long as you verify the land status, ensure clean paperwork, and follow proper banking channels, purchasing an NA plot becomes a smooth and secure process for any NRI.
5 Key Things NRIs Should Know Before Investing in Indian Real Estate
1. Foreign Exchange Rules
- NRIs must follow the FEMA (Foreign Exchange Management Act when investing.
- They can generally buy residential or commercial property, but not agricultural land.
- Inheritance or gifts of property are allowed, even for NRIs.
- Court permission may be needed in very specific cases for farm or agricultural land.
2. Tax Implications
- When selling the property within 2 years, any profit is treated as short-term capital gains — taxed at 30%.
- If the property is sold after 2 years, it falls under long-term capital gains, and the tax rate is 20% (after adjusting for inflation).
- The tax for long-term gains needs to be paid on the full sale value first; later, you can claim a rebate based on the indexed cost.
3. Picking the Right Type of Property
- NRIs should decide whether they want residential or commercial property, depending on their goal (rent-earning, capital growth, personal use).
- Residential properties are currently more popular and in demand, but commercial real estate in good locations can yield strong rental returns.
- It's safer to invest with reputed and trusted builders — check for certifications, government approvals, and track records.
4. Using Power of Attorney (POA)
- Since NRIs may not always be physically present in India, they can appoint a Power of Attorney (POA) to manage the property.
- Choose a trusted person (family or professional) as POA to oversee payments, maintenance, or legal matters.
- Ensure the POA document is legally sound and follows all government compliance to avoid future disputes.
5. Home Loan Options
- NRIs can take home loans in India — typically up to 80% of the property value.
- It’s recommended to use an NRE account when applying for the loan.
- After selling, loan repayment or proceeds can often be managed through NRE / NRO accounts, making it simpler to move money.
Why It’s a Good Time to Invest
- Real estate offers diversification compared to stocks or crypto.
- With research and compliance, NRIs can tap into India’s real estate market and gain from capital growth or rental income.
1. Meaning of Benami Property
- Any asset held in someone else's name, while the actual payment was made by another person, constitutes a benami property.
- The person in whose name the property is registered is called the benamidar.
- Beneficial owner means the real payer or the person who receives the benefit of the property.
- The term applies to: Land, plots, buildings, Farmhouses, vehicles, jewellery, cash, shares, financial assets
2. Why Benami Transactions Are Prohibited
These Benami properties are used to:
- Conceal illegal revenues
- Hide assets
- Evade taxes
- Invest black money in real estate.
3. Types of Benami Transactions
A transaction may be benami if:
- Property is in some other person's name, yet money is provided by some other person.
- The owner denies knowledge of the property.
- The actual source of the funds remains hidden.
- A fictitious name or identity is used in the transaction.
4. What is not Benami
Certain genuine situations are exempt, such as:
- Property held in the name of a spouse or child
- Property held for the benefit of a Hindu Undivided Family.
- Assets held by a trustee, company director, or partner on behalf of the organization.
- Property acquired through known and legal sources of income with proper documentation.
5. Important Provisions of the Benami Property Act
All benami transactions are strictly prohibited.
Authorities are empowered to:
- Investigate
- Attach property
- Freeze transfers
- Confiscate assets
- The law applies to both:
- The nameholder (benamidar)
- The beneficial owner -actual payer-
6. Penalties for Benami Transactions
Penalties under the law are stringent:
- Rigorous imprisonment from 1 to 7 years.
- A monetary penalty of up to 25% of the fair market value of the property.
- For furnishing false information or misguiding the investigations, end
- Imprisonment of between 6 months and 5 years.
- A fine of up to 10 per cent of the property's fair market value.
7. Consequences for Individuals
If involved in a benami deal:
- You lose legal ownership of the property.
- Confiscated property is taken by the government without compensation.
- Both parties can face jail and fines: the real owner and the nameholder.
- Even unknowing participation may lead to investigations and legal problems.
8. Why Understanding Benami Laws Matters
- Prevents buying property that might thereafter be seized.
- Helps in ensuring that real estate transactions are clean, transparent, and compliant.
- Safeguards residents and NRIs from fraudulent or illegal dealings.
- Essential for safe investing in land, plots, and property in India.
Conclusion
Laws on benami property in India are designed to ensure transparency and prevent real estate from being misused for illicit financial dealings. Any property bought in someone else's name, when not clearly, legally, and documentedly justified, can be classified as benami. The penalties are strict, and the government has strong powers to investigate and confiscate such assets. It is very important for every buyer, investor, and especially NRIs who wish to invest in Indian property to understand these rules.
Mere Ownership of Agricultural Land Not Enough to Claim Agricultural Income, Rules ITAT
(ITAT) The Income Tax Appellate Tribunal , Chennai Bench, has held that simply owning agricultural land is not sufficient to justify claims of agricultural income. In a significant ruling, the Tribunal upheld the addition of 50% of the assessee’s declared agricultural income as unexplained under Section 68 of the Income Tax Act.
The assessee had filed his return declaring substantial agricultural income.
A search was conducted at his premises, after which assessment proceedings were reopened.
Assessment Officer’s Findings
The taxpayer claimed ownership of about 47 acres of wet and dry land.
However, he failed to provide supporting evidence of cultivation, such as:
- Land-revenue records (Chitta, Adangal)
- Details of agricultural expenditure
- Proof of sale of agricultural produce
Due to lack of documentation, the Assessing Officer treated the entire agricultural income as unexplained credit.
CIT(A) Observations
Only patta documents (land ownership) were submitted; no cultivation-related records were provided.
The assessee was unable to demonstrate actual agricultural operations.
Considering the circumstances, the CIT(A) accepted 50% of the declared agricultural income as reasonable and treated the remaining 50% as unexplained.
ITAT’s Decision
The Tribunal upheld the view of the CIT(A) and dismissed the assessee’s appeals for both assessment years.
Key observations:
Ownership of land does not automatically prove agricultural activity.
No evidence of expenditure, crop details, yield, or sales was produced.
Income claimed as agricultural income must be backed by verifiable records.
The ITAT concluded that treating half of the agricultural income as unexplained was justified.
Key Takeaways
Taxpayers claiming agricultural income must maintain:
- Cultivation records
- Expense details
- Sale receipts or proof of buyers
Mere possession of agricultural land is not enough to support agricultural income claims.
Inaccurate or unsubstantiated claims may lead to additions under Section 68 as unexplained credits.
1. What is Khudkasht?
The word Khudkasht comes from old land-revenue systems in India.
It means land that is personally cultivated by the owner.
Cultivation can be done by:
- the owner himself,
- the owner’s family members,
- or hired labour working under the owner’s supervision.
It also includes land earlier recorded as Sir, Havala, Niji-jot, etc., in old settlement records.
2. Legal Meaning of Khudkasht
Indian tenancy and land revenue laws clearly define what counts as “personal cultivation.”
Even if owners like widows, minors, or disabled persons cannot personally supervise cultivation, the land can still legally be considered Khudkasht.
Courts have explained that Khudkasht land must be under direct control and use of the landowner, not tenants.
3. Key Features of Khudkasht Land
- Land is directly cultivated by the landowner, not rented out.
- Land is recorded in revenue records specifically as Khudkasht.
- Rights are connected to personal use, not to tenancy.
- Transfer of Khudkasht land can have restrictions, depending on state laws.
- These rights can be passed on to legal heirs.
4. Why Khudkasht Matters in Real Estate
A. Ownership Rights
Khudkasht holders have strong rights because they cultivate the land themselves.
These rights often continue even after changes in land laws.
B. Transfer Restrictions
Khudkasht land usually cannot be sold or transferred freely like normal freehold land.
Some transfers may require government permission or may not be allowed at all.
C. Effect on Land Value
Because of limited transfer rights, Khudkasht land often has lower market value compared to freehold land.
D. Loan & Finance Impact
Banks may be hesitant to lend large amounts on Khudkasht land.
Restricted ownership lowers the land’s mortgage value.
Summary
- Khudkasht = land personally cultivated by the owner.
- Includes owner’s labour, family labour or supervised hired labour.
- Clearly defined in law and supported by court judgments.
- Transfer often restricted → lower market value.
- Important for inheritance, loans, and development.
- Always check revenue records before buying.
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