Agricultural Land Laws for NRIs

November 18, 2025

Land Buying Guides ,

Read Time:-3 Min

1. The NRI Interest in Farmland

Many NRIs dream of owning agricultural land or a farmhouse in India.

However, farmland ownership for NRIs is legally restricted and needs careful compliance.

2. What NRIs Cannot Buy

Direct Purchase Restrictions (FEMA Rules)

NRIs/OCIs cannot directly purchase the following:

Agricultural land
Plantation property
Farmhouses

3. Why This Restriction Exists

FEMA and RBI regulations classify agricultural land as restricted property for foreign persons.

Buying without compliance can lead to:

Penalties
Land being declared illegal possession
Enforcement actions

4. What NRIs Can Acquire Legally

1. Inherited Property

NRIs can inherit agricultural/plantation land or a farmhouse.

Inheritance is a fully legal and common way for NRIs to own agricultural land.

2. Receiving Land as a Gift

NRIs can receive agricultural land as a gift from a resident Indian relative.

But they cannot gift agricultural land to another NRI or OCI.

5. Buying Agricultural Land With RBI Permission

Agricultural land
Plantation property
A farmhouse

Applications must be submitted to the RBI Exchange Control Department (Foreign Investment Division), Mumbai.

Approval is not guaranteed; it is granted case-by-case.

6. Key Documents Required

Before proceeding, NRIs must collect:

Mother Deed / Title Deeds
Personal documents (passport, OCI/PIO card, visa status)
Evidence of inheritance/gift deed, if applicable
Source of funds documentation
Declarations required under state laws
RBI permission documents, if approval is sought

7. Gift & Benami Law Restrictions

Gifting Rules

Allowed: Resident Indian → NRI (gift of agricultural land)

Not allowed: NRI → NRI/OCI (gift of agricultural land)

Benami Transactions Act

NRIs cannot buy land in someone else’s name, except:

Spouse
Sibling
Parent
Child

Violating this can lead to property confiscation and penalties.

8. Selling Agricultural Land as an NRI

If the Land Was Inherited

NRIs can sell inherited agricultural land, but with conditions:

Sale is usually allowed only to a resident Indian.
The sale amount must be credited to an NRO account.
Repatriation (sending money abroad) is allowed up to USD 1 million per financial year, after:
Paying taxes
Filing forms 15CA & 15CB

9. Tax Rules Explained

Urban vs Rural Agricultural Land

Rural agricultural land
Not considered a capital asset → may attract no capital gains tax.
Urban agricultural land

10. State-Level Land Laws

Land rules differ across states — some require you to be a registered farmer.

Even with RBI permission, state regulations may stop or delay agricultural land purchase.

Certain states only allow purchase if:

You already own agricultural land
You have farmer ancestry
You meet specific local criteria

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