Explained: Can NRIs Buy an Agricultural Land in India?
July 21, 2025

Real estate investment is often a top priority for Non-Resident Indians (NRIs) looking to retain strong financial ties to India. While they can freely purchase residential and commercial properties, agricultural land, plantations, and farmhouses remain off-limits for direct purchase. This blog breaks down the legalities, exceptions, and alternatives for NRIs interested in agricultural land in India.
Legal Framework: Can NRIs Buy Agricultural Land?
Under the Foreign Exchange Management Act (FEMA), 1999, NRIs are prohibited from purchasing agricultural land, plantation property, or farmhouses in India. The Reserve Bank of India (RBI) enforces this restriction to protect agricultural land from speculative investments.
Exceptions to the Rule
Although NRIs cannot buy agricultural land outright, there are two primary exceptions:
- Inheritance: NRIs can inherit agricultural land from a resident Indian.
- Gift from a Resident Indian: Agricultural land can be gifted to an NRI only by a resident Indian who is a relative, as defined under FEMA.
Inheritance of Agricultural Land by NRIs
If an NRI inherits agricultural land from a parent or relative, they become its legal owner. However, there are restrictions on how they can manage this land:
- Holding: NRIs can retain inherited agricultural land.
- Selling: NRIs can sell inherited agricultural land only to a resident Indian.
- Repatriation of Funds: The sale proceeds can be remitted abroad, subject to RBI regulations and tax compliance.
Special Permissions from the RBI
In rare cases, NRIs may apply to the Reserve Bank of India (RBI) for special approval to acquire agricultural land. However, these approvals are extremely limited and granted only under exceptional circumstances, usually for agricultural or community development purposes.
Documents Required for Inheritance or Gift Transactions
For an NRI to inherit or receive agricultural land as a gift, the following documents are essential:
- Legal Heir Certificate or Gift Deed: Proof of inheritance or gifting.
- NRI Bank Account Details: NRE/NRO account details for financial transactions.
- Identification Proof: Passport and visa details.
- Title Deed: Original property documents.
- No-Objection Certificate (NOC): Required in case of inheritance disputes.
Selling Agricultural Land as an NRI
If an NRI inherits agricultural land, they cannot sell it to another NRI or foreign national. The sale must be made only to an Indian citizen who is a resident. The funds from the sale can be repatriated abroad within RBI-set limits, and after paying applicable taxes.
Taxation on Agricultural Land Transactions for NRIs
When an NRI sells inherited or gifted agricultural land, they must adhere to Indian tax laws:
- Capital Gains Tax: If the land has been held for more than two years, it is subject to long-term capital gains tax (LTCG). The current LTCG is 12.5% without indexation benefits.
- TDS (Tax Deducted at Source): The buyer must deduct TDS before making payment to the NRI.
- DTAA Benefits: If the NRI is from a country that has a Double Taxation Avoidance Agreement (DTAA) with India, they may be eligible for lower tax rates.
Final Thoughts
While NRIs cannot directly purchase agricultural land in India, they can inherit or receive it as a gift under specific conditions. However, legal and tax implications must be carefully considered before engaging in such transactions. Consulting a legal expert is always recommended to ensure compliance with FEMA and RBI guidelines.
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FAQs
1. Can an NRI buy agricultural land in India through a company?
No, even if an NRI owns a company in India, the company cannot buy agricultural land unless it is engaged in agriculture-related activities and receives special approval from the RBI and state government.
2. Can NRIs lease agricultural land in India?
Yes, NRIs can lease agricultural land for farming activities, but they must comply with state-specific land laws. However, leasing does not grant them ownership rights.
3. What happens if an NRI unknowingly buys agricultural land in India?
If an NRI unknowingly purchases agricultural land, the transaction is considered void under FEMA. The RBI may require them to sell the land within a specified timeframe, often at market value.
4. Can a Person of Indian Origin (PIO) buy agricultural land in India?
No, just like NRIs, PIOs are also prohibited from purchasing agricultural land in India. However, they can inherit or receive it as a gift from a resident Indian.
5. Can an NRI convert agricultural land into non-agricultural land and then buy it?
In some states, agricultural land can be converted into non-agricultural land, but this process must be completed before purchase. An NRI cannot directly apply for land conversion and then buy it.
6. Can an NRI purchase agricultural land if they become an Indian citizen later?
Yes, once an NRI re-acquires Indian citizenship, they are free to purchase agricultural land, provided they follow state-specific land laws and restrictions.
7. How can an NRI check the legal status of inherited agricultural land?
An NRI should consult a legal expert, verify land records at the local revenue office, and obtain an Encumbrance Certificate to ensure the land is free from disputes or legal claims.
8. Can agricultural land be transferred to an NRI through a Will?
Yes, an Indian citizen can bequeath agricultural land to an NRI through a legally valid Will. The NRI can inherit it, but they must follow FEMA guidelines for selling or managing the land.
9. Can NRIs use inherited agricultural land for commercial purposes?
No, inherited agricultural land must be used for farming purposes. Any commercial development or conversion requires approval from local authorities and the state government.
10. Can NRIs jointly own agricultural land with resident Indians?
No, NRIs cannot enter into joint ownership of agricultural land with resident Indians unless they inherit it. Even in inheritance cases, they cannot transfer their ownership to another NRI.
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