Many NRIs want a piece of farmland back home. Some want to retire to it, some see it as an investment, and some simply want to keep a family connection alive. So, can NRI buy agricultural land in India? The legal answer is no. There are a few lawful ways to own or hold it, though, and the rules on selling it are stricter than most people expect.
This guide sets out what the Foreign Exchange Management Act, 1999 (FEMA) and the rules under it allow, where NRIs usually go wrong, and what to do if you already own farmland in India.
Can NRI buy Agricultural land in India? The short answer
No. An NRI or OCI cardholder cannot purchase agricultural land, plantation property or a farmhouse in India. The restriction comes from Rule 24 of the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019, which gives NRIs and OCIs general permission to buy immovable property in India but carves out these three categories.
The bar applies whatever the state law says. Karnataka, for example, relaxed its land reform law in 2020 so that non-agriculturists could buy farmland. That change opened the door for resident Indians. It did nothing for NRIs, because FEMA is central law and still applies.
The restriction also covers joint purchases. If you buy farmland jointly with a resident sibling or parent, your share of that purchase is still barred.
NRI property rules RBI applies: who counts as an NRI
The RBI administers FEMA, and its Master Direction on Acquisition and Transfer of Immovable Property in India brings the NRI property rules together in one place. Under those rules, what matters is where you live, not which passport you hold. An Indian citizen who has moved abroad for work, business or any purpose that shows an intention to stay outside India for an uncertain period is a “person resident outside India.” Holding an Indian passport does not change that.
OCI cardholders are treated the same way as NRIs for property purposes. Both can buy flats, houses, offices and shops without RBI approval, and both face the same bar on agricultural land. A foreign national without an OCI card generally needs prior RBI approval even for residential property.
The lawful ways an NRI can hold agricultural land
1. Can NRI inherit agricultural land in India?
Yes. Inheritance is the one settled route. An NRI or OCI can inherit agricultural land from:
- a person resident in India, or
- a person resident outside India who acquired the land lawfully under the foreign exchange rules in force at the time.
There is no cap on how much agricultural land you can inherit. Once the land passes to you, get the mutation done in the revenue records in your name. Unmutated land is the root of many later disputes, especially when siblings in India and abroad share the inheritance.
2. Land you bought while you were a resident
If you bought farmland while you were living in India and later moved abroad, you can keep it. Section 6(5) of FEMA lets a person resident outside India continue to hold immovable property acquired while resident. You do not have to sell it when your status changes.
3. Gift: treat this route with caution
This is where published advice conflicts. Several websites say an NRI can receive agricultural land as a gift from a resident relative. Rule 24 permits NRIs to receive property by gift from a relative, but that permission covers immovable property other than agricultural land, plantation property and farmhouses.
The safer reading is that an NRI cannot receive agricultural land by gift, even from a parent. If a family is planning to pass farmland to a child who lives abroad, a will is the cleaner option. Take legal advice before registering any gift deed for farmland in an NRI’s name.
4. RBI prior approval
The RBI can, in theory, approve a purchase that falls outside the general permission. In practice approvals for farmland are rare and granted only in exceptional cases. Nobody should build a purchase plan around this route.
What about land that has been converted?
The FEMA bar applies to land that is agricultural at the time you buy it. If a plot has already been lawfully converted to non-agricultural use, with a conversion order (often called an NA order or change of land use) recorded in the revenue records, it is no longer agricultural land and an NRI can generally buy it like any other plot.
Check the revenue records yourself before you pay anything. A plot marketed as a “farm plot” or “weekend home” may still be classified as agricultural on paper, and FEMA goes by the record, not by how the land looks or what the brochure says. Conversion that is only “in process” does not help.
Selling agricultural land as an NRI
An NRI who owns farmland, whether inherited or bought while resident, can sell it. The buyer must be a person resident in India who is an Indian citizen. You cannot sell or gift agricultural land to another NRI, an OCI or a foreign national.
Sale proceeds go into your NRO account. From there, you can repatriate up to USD 1 million per financial year, covering all your NRO balances and asset sale proceeds together. The bank will ask for a chartered accountant’s certificate (Form 15CB), the online Form 15CA, and proof of how you acquired the land, such as the will, succession certificate or original sale deed.
Tax treatment depends on where the land is. Rural agricultural land beyond specified distances from municipal limits is generally not treated as a capital asset under Indian income tax law, so there is no capital gains tax on its sale. Agricultural land in or close to urban limits is a capital asset, and the sale attracts capital gains tax, with TDS deducted by the buyer on an NRI seller. Have a CA confirm which category your land falls into before you agree a price.
What happens if the rules are broken
A purchase made in breach of FEMA is a contravention. Penalties under Section 13 of FEMA can run up to three times the amount involved where it is quantifiable. The RBI may also direct that the property be sold or the transaction reversed.
If you have already bought farmland after becoming an NRI, often because a local agent or relative handled the paperwork without checking your status, the compounding route with the RBI is available. A FEMA lawyer can prepare the compounding application and deal with the RBI on your behalf. Acting early usually leads to a better outcome than waiting for the issue to surface during a sale or a bank’s repatriation check.
Common mistakes NRIs make
- Buying in a relative’s name. Paying for land that is registered to a resident relative as a workaround can create benami issues and leaves you with no enforceable title.
- Relying on state law. A state allowing non-farmers to buy agricultural land does not override FEMA.
- Using a power of attorney to buy. A PoA holder in India can act for you, but the purchase is still yours in law and still barred.
- Skipping mutation after inheritance. Title problems show up years later, usually when you try to sell.
- Selling to an NRI buyer. The transfer will not be valid and the buyer’s bank will usually catch it.
Speak to a FEMA lawyer before you sign anything
Farmland questions rarely come down to FEMA alone. Succession, mutation, state land laws and tax all play a part. If you have inherited land, are planning a sale, or want to check whether a plot is actually converted, speak to a FEMA lawyer on our NRI property team before you commit.
FAQs
Can an OCI cardholder buy agricultural land in India?
No. OCIs face the same restriction as NRIs. They can buy residential and commercial property freely but not agricultural land, plantation property or a farmhouse.
Can NRI inherit agricultural land in India from parents?
Yes. Inheritance from a resident Indian is permitted, and there is no limit on the area.
Can my parents gift me their farmland?
The rules permit gifts of immovable property to NRIs but exclude agricultural land. A will is the safer way to pass farmland to a child who is an NRI.
I bought farmland before moving abroad. Do I need to sell it?
No. You can continue to hold it after becoming an NRI.
Where can I read the NRI property rules RBI has issued?
The RBI Master Direction on Acquisition and Transfer of Immovable Property in India, read with the FEMA (Non-Debt Instruments) Rules, 2019.