Guide for NRI’s Buying Agricultural Land or farm land in India For NRIs, the purchase of a property in India needs the consideration of many tax and regulatory rules and implications regulated under the Foreign Exchange Management (FEM) (Acquisition and Transfer of Immovable Property in India) Regulations, 2000. While the government of India continually devises new schemes to bolster foreign investments and real estate is one of the most sought-after investment areas for Indian citizens who reside outside India, there are restraints placed on certain immovable properties such as agricultural/plantation/ farm land. Here are few tips to consider for NRIs.

Can an NRI buy a plantation property / agricultural land or farm land in India?

No.

For an NRI, purchasing Agricultural, farm plantation property is not permitted. He cannot obtain such a property as a gift either. However, he can acquire it by way of inheritance.  Apart from this, an NRI can obtain by way of purchasing, any other immovable property in India.

Can NRIs Who Have Got Foreign Citizenships Maintain Ownership of Their Agricultural Land/Farm land /Plantation Property in India?

NRIs who have obtained foreign citizenships can continue to keep ownership of their property in India provided they had acquired them legally before accepting the citizenship of a foreign nation.

From Whom Can an NRI Inherit Agricultural Land / Farm land / Plantation Property?

An NRI can inherit property from a person who is an Indian Resident. An NRI can also, with the permission of the RBI, acquire agricultural land/farm land/plantation property through inheritance from a person who is resident outside India. Provided the bequeathed had obtained the property in accordance with the foreign exchange law or Foreign Exchange Management Act regulations, applicable at the time they bought or inherited the property.

Can an NRI Transfer Agricultural Land / Farm / Plantation Property Acquire by Inheritance?

Yes, an NRI can transfer this property acquired by inheritance only to citizens of India permanently residing in India, by gift or as a sale.

What are the implications of tax for an NRI on inheriting Agricultural Land / Farm / Plantation Property Acquired by Inheritance?

Though there is no tax imposed at the time of inheritance, but in case they sell the property to a citizen of India residing in India, capital gains tax on sale proceeds will be imposed. On payment of the tax, the earnings from the sale proceeds can be sent abroad lest they surpass 1 million USD in any financial year.

Can the Agricultural Land / Farm land / Plantation Property Be Converted to A Land for Business or Residential purpose by an NRI?

To legally converted to a residential or business land is cumbersome. Following Points should be kept in mind:

1. Every state has their own rules and regulations concerning the conversion of agricultural land / farm land / plantation property. Those rules should be reconsidered before making any decision.
2. If an NRI inherits an agricultural land / farm land / plantation property that has already been converted to a business or residential land, they must cross check all the documents with the appropriate municipal registration offices.
3. If an NRI converts this property, he can only sell it to an Indian resident who is an Indian Citizen, after a certain period since the conversion takes place. Additionally, the land required to be used for the purpose it was being converted within a specified period lest the conversion becomes null and void.

Though general permission to acquire agricultural land / farm land / plantation property in India is unavailable to NRI’s, in special cases these proposals can be sent for approval to the Reserve Bank of India (RBI), the decision of which is made in consultation with the Government of India.