NEW DELHI: For Non-Resident Indians (NRIs) considering property investments in India in 2025, a key question remains: can they buy agricultural land, where, under what conditions, and how does the law regulate it?Under the Foreign Exchange Management Act (FEMA), enforced by the Reserve Bank of India (RBI), NRIs are not permitted to purchase agricultural land, plantation property, or farmhouses directly.
The restriction applies nationwide and continues to be strictly enforced to prevent speculative acquisition of agricultural assets.However, the law does provide limited pathways. NRIs can acquire agricultural land through inheritance or as a gift from a resident Indian relative, as defined under FEMA. Even in such cases, ownership comes with conditions—particularly around sale and repatriation of funds—making compliance crucial.
What law allows—and prohibits
Under FEMA regulations, NRIs, Persons of Indian Origin (PIOs), and Overseas Citizens of India (OCIs) can freely invest in residential and commercial real estate without requiring RBI approval. Payments must be made in Indian Rupees via approved banking channels such as NRE, NRO, or FCNR accounts.But agricultural land remains a clear exception. Direct purchase is prohibited, and RBI approvals for such transactions are extremely rare, granted only in exceptional circumstances, typically linked to agricultural or community development.
Key exceptions
Despite the restriction, there are two legally recognised routes for NRIs to own agricultural land:
- Inheritance: NRIs can inherit agricultural land from a resident Indian, becoming lawful owners.
- Gift: Agricultural land can be gifted to an NRI, but only by a resident Indian relative.
In both scenarios, the acquisition must be properly documented through a legal heir certificate or registered gift deed, along with supporting identity and title documents.
What happens after inheritance?
Ownership does not equate to full flexibility. NRIs who inherit agricultural land can hold and manage the property, but face strict limitations:They can sell the land only to a resident Indian, not to another NRI or foreign national.Sale proceeds can be repatriated abroad, subject to RBI guidelines, tax compliance, and documentation such as CA certificates and Form 15CA/CB.
Tax implications NRIs must consider
Taxation plays a significant role in agricultural land transactions involving NRIs:If the land is sold after being held for more than two years, it is treated as a long-term capital asset, attracting long-term capital gains (LTCG) tax.Buyers must deduct Tax Deducted at Source (TDS) before paying the NRI seller.NRIs may benefit from Double Taxation Avoidance Agreements (DTAA), allowing them to offset taxes paid in India against liabilities in their country of residence.
Documentation
Whether acquiring through inheritance or gift, NRIs must ensure:
- Clear title and ownership verification
- Encumbrance-free status
- Proper registration and legal documentation
- Valid identification, PAN, and overseas address proof
- Legal due diligence remains essential to avoid disputes, especially in inheritance cases involving multiple claimants.
The bigger picture
While agricultural land is largely off-limits, NRIs continue to show strong interest in Indian real estate—particularly in residential and commercial segments across cities like Mumbai, Delhi-NCR, Bengaluru, Pune, and Hyderabad.
These markets offer better liquidity, regulatory clarity, and fewer restrictions compared to agricultural assets.In 2025, the answer remains unchanged: NRIs cannot directly buy agricultural land in India. The only permissible routes are inheritance or receiving it as a gift from a resident Indian relative, both of which come with regulatory and tax obligations. For NRIs seeking to invest in India, understanding FEMA rules and focusing on compliant asset classes is essential for a secure and hassle-free investment journey.
