No. Under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, an NRI or OCI cardholder may not purchase agricultural land, a farmhouse or plantation property in India. They may acquire such property only by inheritance, and may hold what they owned before becoming non-resident. They can sell or gift it only to a person resident in India who is an Indian citizen. A purchase in breach is a FEMA contravention that should be regularised by transfer and compounding.
What the rule says
The general permission for NRIs and OCIs to acquire immovable property in India expressly excludes agricultural land, farmhouses and plantation property. The exclusion covers purchase and also acquisition by gift: a resident relative cannot gift agricultural land to an NRI. The Reserve Bank can consider individual applications in consultation with the government, but permission is rarely given, and an application is not a practical route for an ordinary purchase.
The rule is about status at the time of acquisition. It does not require you to give up land you bought while resident in India before moving abroad.
What counts as agricultural land
FEMA does not define the term. The test is the land's classification in the revenue record and under the state land law on the date of acquisition, not what the brochure calls it or what it is used for. A "farm plot", "orchard villa" or "weekend farm" is agricultural land if the record of rights says so. Land within a municipal area that has been formally converted to non-agricultural use by the competent authority, with the conversion order and updated record, is no longer agricultural and may be bought.
Before paying for any plot outside a clearly urban, approved layout, have the land-use entry checked as part of title due diligence. Separately, several states restrict purchase of farm land to agriculturists or domiciled persons regardless of residence, which can catch even returning Indians.
What an NRI or OCI can do
- Inherit agricultural land, a farmhouse or plantation from a person resident in India, under a will or succession law. See inheritance rules.
- Continue to hold land acquired while resident.
- Earn from it: agricultural income is exempt from Indian income tax; lease or crop-share income goes to the NRO account.
- Sell to a resident Indian citizen.
- Gift to a resident Indian citizen.
- Buy residential and commercial property, and non-agricultural plots.
What they cannot do is sell or gift agricultural land to another NRI or OCI, or to a foreign national.
Selling inherited agricultural land
First have the land mutated in your name. The buyer must be resident in India and an Indian citizen. Tax depends on location: rural agricultural land, outside specified distances from municipal limits, is not a capital asset and its sale is not subject to capital gains tax, while urban agricultural land is taxed like other property with reinvestment relief available. Proceeds are credited to your NRO account and can be remitted within the one million US dollar annual limit. See repatriation.
If you have already bought
Purchases are commonly made in a parent's or sibling's name with the NRI's money, or directly on the strength of an Indian identity document without the status question being asked. The first raises ownership and trust issues, and potentially the law against benami transactions; the second is a straightforward FEMA contravention. Penalty can be up to three times the sum involved, and the Enforcement Directorate can adjudicate.
The accepted way out is to transfer the land to an eligible resident and apply to the Reserve Bank for compounding, disclosing the facts voluntarily. Compounding amounts are moderate where the breach is unintentional and promptly corrected. See FEMA compliance and compounding. Do not wait for a bank to raise the issue during a later repatriation.
Planning to return to India
Once you return and become resident under FEMA, the restriction falls away for Indian citizens, subject to state land laws. OCI cardholders remain under the restriction even when living in India, because it attaches to the status and not to residence. If farming or a farmhouse is part of your plan, time the purchase after your return, or structure it within what state law permits.
- NRIs and OCIs cannot buy or be gifted agricultural land, farmhouses or plantations.
- They can inherit such land and keep what they owned before leaving India.
- Sale or gift must be to a resident Indian citizen.
- A purchase in breach should be reversed and compounded with the Reserve Bank.
Frequently asked questions
Can an NRI buy agricultural land in a relative's name?
Paying for land held in another's name creates serious legal risk, including under the benami law, and gives you no secure title. It is not a lawful workaround.
Can an NRI buy a farmhouse in India?
No. Farmhouses are expressly excluded from what NRIs and OCIs may acquire, along with agricultural land and plantation property.
Can an NRI sell inherited agricultural land to another NRI?
No. The transfer must be to a person resident in India who is a citizen of India.
Can agricultural land be converted so that an NRI can buy it?
If the owner obtains a valid conversion to non-agricultural use from the competent authority and the records are updated, the land ceases to be agricultural and can be bought. Verify the conversion order before paying.
Is income from inherited farm land taxable for an NRI?
Agricultural income from land in India is exempt from Indian income tax for residents and non-residents alike, though it may be taxable in your country of residence.
