The Reserve Bank of India (RBI) has given general permission to NRIs to acquire property in India. However, it does not mean that NRIs can buy any type of property. NRIs can only purchase commercial and residential properties in India. This also is subject to specific rules, and taxation applies to the purchase of property in India by NRIs.
Regarding agricultural land, NRIs are NOT allowed to purchase agricultural land, farmland, farmhouses, or plantations in India.
So, to simply answer the question “Can NRIs buy agricultural land in India?”, the answer is a straight no.
However, this gives rise to other questions…
Can NRIs get agricultural land by gift?
The answer to this, too, is no. NRIs cannot acquire agricultural land in India even by gift. While other types of properties can be acquired by the way of gift, this is not so for agricultural land.
Can NRIs inherit agricultural land in India?
Inheriting agricultural land is the only way NRIs can own agricultural land in India.
From whom can NRIs inherit agricultural land?
NRIs can inherit agricultural land, farmland, farmhouses, and/or plantations in India from a resident of India only.
If NRIs inherit agricultural land from a non-resident of India, the approval of the RBI is necessary. Also, the owner of the agricultural land should have been a citizen of India while buying or inheriting the property. It should also be in accordance with FEMA or other relevant laws at that time.
What can NRIs do with inherited agricultural land in India?
NRIs are allowed to transfer the ownership of the agricultural land by gift or by sale, but only to a permanent resident of India.
In the case of the sale of the inherited agricultural land, there will be tax implications, as well.
Tax implications for NRIs selling inherited agricultural land in India
While NRIs don’t have to pay any tax on the inheritance of agricultural land, it will need to be paid on the sale.
Capital gains tax is levied on the sale proceeds in such transactions. The earnings from such sales can only be remitted abroad after the payment of the due taxes.
Can the inherited agricultural land be converted to commercial or residential land?
NRIs can get the conversion done to commercial or residential land after inheriting agricultural land in India.
However, converting agricultural land to commercial or residential land is, in itself, a lengthy and time-consuming process. It becomes all the more complicated in the case of NRI agricultural land ownership.
The applicable policies also differ from state to state. It is best to reach out to the concerned authorities to understand the procedure.
An important point about converting agricultural land to commercial or residential land is that the converted property can only be sold to Indian citizens. And the sale can take place only after a certain period of time following the conversion.
Also, you need to ensure that the land is specifically used for the purpose for which it was converted within a certain period of time.
Note – NRIs can also inherit agricultural land that has already been converted before inheritance. It is best to get all the documentation checked in such cases.
If you desire to acquire agricultural land through means other than inheritance, you can send a proposal to the RBI. This, however, is only applicable in special cases. A decision will be made after consultation with the Government of India.
