NRI Agricultural Land: Are you an NRI Planning your retirement in India? Do you wish to own a beautiful farmhouse, a bit on the outskirts of the busy city life, with a wonderful lawn for the kids to play in and an easy chair where you can sit and enjoy your morning tea while reading the good old newspaper? Tempting! Isn’t it?
But Can NRI buy agricultural land in India? Can you actually plan this retirement at a farmhouse or an agricultural land/ plantation property? Can you buy agricultural land in India? Let’s find out.
NRI Agricultural Land purchase
Let’s consider the guidelines: According to Foreign Exchange Management Act and the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2018, both NRIs and OCIs aren’t allowed to buy any agricultural land or plantation property or farmhouses in India by law unless they get a special permission from the Reserve Bank of India (RBI).
Inheritance of Agricultural Land for NRI
NRIs as well as OCIs can’t directly buy agricultural land, plantation property, or a farmhouse in India but they can inherit it from a Resident Indian. An NRI can even inherit such properties from other NRIs subject to certain regulations such as special permissions from RBI.
Also Read: NRI selling inherited property in India: Tax Implications
Gift of Agricultural Land to NRI and vice versa
An NRI or OCI can receive an agricultural/ plantation property or a farmhouse as a gift from a Resident Indian but an NRI can’t give such properties to other NRIs as gifts. An NRI can only give such properties to a Resident India as gifts. In easy terms:
| Gift of Property | Regulation |
|---|---|
| Resident Indian to NRI gift of property | Yes; Can be gifted |
| NRI to Resident Indian gift of property | Yes; Can be gifted |
| NRI to NRI gift of property | No; Can’t be gifted |
Note: Property in the above table refers to agricultural land, plantation property and farmhouses. Also, consider the Benami Act while gifting properties.
Sale of Agricultural Land by NRI
NRIs and OCIs can sell agricultural land, plantation property, or a farmhouse only to a Resident Indian. For the lands purchased with permissions from RBI, special approvals are required to complete sale transactions.
The proceeds from the property needs to be deposited in the NRO Account of the NRI. The maximum amount that can be remitted from an NRO Account is US$ 1 million. The process of repatriation is the same done for outward remittances involving the forms 15CA and 15CB. In addition to these, other documents like will, legal heir certificate, death certificate (in case of inheritance), and sale agreement (in case of sale)
Taxation on Agricultural Land for NRI
The taxation on sale of agricultural land is different for rural and urban areas. Rural agricultural lands are not capital assets therefore no capital gains tax is applicable whereas in case of urban agricultural land capital gains tax is applicable.
Read more about Taxation and other aspects regarding sale of property by NRI in our article: Investment in India by NRI: Real Estate 2020
Agricultural land in India for NRI: Benami Transactions
Buying properties is in itself a complex job. An NRI can’t buy a property in the name of another person unless that person is a spouse, brother, sister or lineal ascendant or descendant. Buying a property in the name of someone else is considered illegal under the Benami Act.
Real Estate Advisory: Schedule a call with an expert
Buying and selling of NRI agricultural land involves a lot of permissions and regulations that need to be taken care of. At SBNRI, we understand your struggle and offer customized solutions to your specific needs.
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FAQs
An NRI or OCI can receive an agricultural/ plantation property or a farmhouse as a gift from a Resident Indian but an NRI can’t give such properties to other NRIs as gifts. An NRI can only give such properties to a Resident India as gifts.
All requests for acquisition of agricultural land/plantation property/ farm house by any person resident outside India or foreign nationals may be made to The Chief General Manager, Reserve Bank of India, Central Office, Exchange Control Department, Foreign Investment Division (III), Mumbai 400 001
According to Foreign Exchange Management Act and the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2018, both NRIs and OCIs aren’t allowed to buy any agricultural land or plantation property or farmhouses in India by law unless they get a special permission from the Reserve Bank of India (RBI).
NRIs can sell an inherited property or gift the same and remit the money outside India. However, NRIs can give an inherited property as a gift only to an Indian resident or to another NRI/ Persons of Indian Origin (PIO) (apart from agricultural land).
NRIs cannot buy agricultural land in India except with the prior permission of the Reserve Bank of India (RBI).
