Can NRIs and OCIs Buy Agricultural Land or a Farmhouse in India? What FEMA Allows

NRIs and OCIs cannot buy agricultural land, plantation property or farmhouses. They can inherit them, and sell only to a resident Indian. What this means for that "weekend farm" near Mumbai.

Aerial view of the Worli and Lower Parel skyline

Every few months an NRI client asks about buying a plot or a farmhouse outside Mumbai. The answer surprises them. Under India's foreign exchange rules, an NRI or OCI cannot buy agricultural land, plantation property or a farmhouse.

The RBI's Master Direction on acquiring immovable property allows NRIs and OCIs to buy any other immovable property in India, such as flats, offices and shops.

A farmhouse near Karjat sounds lovely. For an NRI, buying one is not allowed. Inheriting one is.

What is allowed

Inheritance: an NRI or OCI can inherit agricultural land from a person resident in India.
Gift: farmland can be received as a gift only in limited cases, from a resident relative. Check the current rules before accepting one.
Selling inherited farmland: only to a resident Indian citizen, not to another NRI or a foreigner.

What is not allowed

Buying farmland, a plantation or a farmhouse in your own name.
Getting around the rule through a resident relative holding it "for you". That puts the title in their name, not yours.

If an NRI ends up acquiring such land by mistake, the transaction can be treated as a breach of FEMA and the land may have to be sold.

What you can buy

Flats, commercial property and non-agricultural plots, paid for through normal banking channels or your NRE, FCNR(B) or NRO account. See what FEMA allows NRIs and OCIs to buy and repatriate.

Before buying land anywhere outside the city, check that it has been converted to non-agricultural use, and get the land records checked by a lawyer.

Frequently asked questions

Can an NRI buy agricultural land in India?

No. NRIs and OCIs cannot buy agricultural land, plantation property or farmhouses. They can inherit such land from a person resident in India.

Who can an NRI sell inherited agricultural land to?

Only to a person resident in India who is an Indian citizen.

Sources

This is general information, not legal or tax advice. Rules change, so check your own case with a lawyer or CA.

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Warmly,
Yanik

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