An NRI or an OCI cardholder cannot buy agricultural land, a farm house or plantation property in India, and cannot receive one as a gift. The same person can inherit any of these, can keep land bought while still resident in India, and can sell or gift it to a person resident in India. So the answer to "can an NRI buy agricultural land in India" turns on how the land arrives, not on who the NRI is or how the money is paid.
These rules come from rule 24 of the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, read with section 6(5) of the Foreign Exchange Management Act, 1999 (FEMA). The Reserve Bank of India explains them in its Master Direction on acquisition or transfer of immovable property under FEMA (Master Direction No. 12, last updated 1 September 2022) and in its FAQs on purchase of immovable property by non-resident individuals (updated 8 April 2025). Everything below is checked against those two documents as they stood on 23 October 2026.
Who the restriction applies to
The Master Direction uses two defined terms. An NRI is a person resident outside India who is a citizen of India. An OCI is a person resident outside India who is registered as an Overseas Citizen of India cardholder under section 7A of the Citizenship Act, 1955. Both get the same treatment for immovable property.
Residence here is the FEMA test, not the income-tax test. Under section 2(v) of FEMA, a person who goes out of India to take up employment abroad is not treated as resident in India, even though the Income-tax Act may still treat that person as resident for the whole year. The two tests are explained side by side in why the FEMA and income-tax 182-day rules differ. Get this right first, because a purchase made a week after leaving India for a job abroad is a purchase by an NRI.
A foreign citizen who is neither an NRI nor an OCI is in a narrower position still. Such a person cannot buy immovable property in India at all (outside the specific cases for a foreign spouse, long-term visa holders and foreign offices), but can hold property inherited from a person resident in India under section 6(5).
What is allowed, route by route
Rule 24 treats agricultural land, farm houses and plantation property as one restricted class. Everything else (a flat, a house, a shop, an office, a residential plot) is open to NRIs and OCIs. The table sets the two classes side by side, using the clause references given in the RBI FAQs.
| How the property moves | Agricultural land, farm house or plantation | Any other immovable property |
|---|---|---|
| NRI or OCI buys it | Not permitted (rule 24(a)) | Permitted, paid through banking channels |
| NRI or OCI receives it as a gift | Not permitted (rule 24(b)) | Permitted from a relative who is a resident, NRI or OCI |
| NRI or OCI inherits it | Permitted (rule 24(c)) | Permitted (rule 24(c)) |
| NRI or OCI already held it when resident | Can continue to hold under section 6(5) of FEMA | Can continue to hold under section 6(5) of FEMA |
| NRI or OCI sells it | Only to a person resident in India (rule 24(d)) | To a resident, an NRI or an OCI (rule 24(e)) |
| NRI or OCI gifts it | Only to a person resident in India (rule 24(d)) | To a resident, an NRI or an OCI (rule 24(e)) |
Two points sit underneath the table. First, inheritance must come from someone who either held the property lawfully under the foreign exchange law in force when it was acquired, or was a person resident in India. Second, a lease of up to five years is outside these rules altogether (para 1.1 of the Master Direction), so a short lease of farmland to or by an NRI is not an "acquisition" of the land.
FEMA does not define agricultural land, farm house or plantation property in these rules. In practice the character of the land is read from its record under the State's land revenue law on the date of the transaction. If the land records still show agricultural use, assume it falls in the restricted class. State land laws can impose their own limits on who may hold agricultural land, and a FEMA permission does not override them.
The gift that families try and the route that works
The most common situation is a resident parent who wants to pass ancestral farmland to a son or daughter settled abroad. A gift deed executed today does not work: rule 24(b) bars an NRI or OCI from acquiring agricultural land by gift, even from a parent. A sale to the child fails for the same reason under rule 24(a).
Inheritance does work. The parent can leave the land to the NRI child by will, and if the parent dies without a will, the child takes the share that succession law gives. Rule 24(c) allows either. The child can then hold it, sell it to a resident or gift it to a resident relative.
Partition and release deeds deserve care. Section 2(ze) of FEMA defines "transfer" to include sale, gift and "any other form of transfer of right, title, possession or lien". A release by a resident co-owner in favour of an NRI co-owner after the inheritance has already vested is a transfer to the NRI, not part of the inheritance itself. Treat that as needing RBI approval unless the inherited shares are simply being recorded as they fell. A release the other way round, by the NRI in favour of a resident sibling, is a transfer to a person resident in India and is permitted under rule 24(d).
Land bought before going abroad
Section 6(5) of FEMA lets a person resident outside India hold, own, transfer or invest in immovable property in India that was acquired while resident in India, or inherited from a person resident in India. Someone who bought ten acres in 2015 while working in Pune and moved to Canada in 2024 can keep the land without any approval. What that person cannot do is add to it: buying an adjoining plot after becoming an NRI is a fresh purchase by an NRI and is barred.
The same section governs the sale. The land can be sold only to a resident, and the proceeds follow the repatriation rules in the next section.
Selling the land and taking the money abroad
The buyer of agricultural land from an NRI must be a person resident in India. The sale consideration is credited in India, normally to the seller's NRO account. The reason is that para 8.2 of the Master Direction allows authorised dealer banks to repatriate sale proceeds directly only for property other than agricultural land, plantation property or farm house. That direct route also needs the property to have been bought with foreign exchange or NRE/FCNR(B) funds, so it rarely fits farmland in any case.
The money therefore leaves India under the Master Direction on Remittance of Assets (updated as on 29 June 2026). Para 3.2 lets an NRI or PIO remit up to USD 1 million per financial year, on documentary evidence, out of NRO balances, sale proceeds of assets and assets acquired by inheritance or legacy. The current text also allows the amount to be transferred to an NRE account. Three conditions in that paragraph shape the plan:
- The USD 1 million is one combined limit for the financial year (April to March) across all these sources, so rent, interest and other NRO money remitted in the same year uses it up.
- Where the amount goes out in instalments, every instalment must go through the same authorised dealer bank.
- For money remitted from an NRO account, the bank takes an undertaking that the funds are the person's legitimate receivables in India and not borrowed from anyone or transferred from another NRO account.
Anything above USD 1 million in a financial year needs prior RBI approval under para 4.1. The way the NRE and NRO accounts differ on repatriation explains why the sale money must start in the NRO account.
A worked example of the USD 1 million limit
This is an illustration with an assumed exchange rate. Harpreet, an NRI living in Toronto, inherits 6 acres of farmland in Punjab from her mother, a resident, in 2025. She sells it on 15 January 2027 to a resident farmer for ₹12,00,00,000, credited to her NRO account. She has made no other NRO remittance in FY 2026-27. Assume a rate of ₹88 to one US dollar for the whole period.
| Step | Amount | Note |
|---|---|---|
| Sale proceeds in USD at ₹88 | about USD 1.36 million | ₹12,00,00,000 ÷ 88 |
| Remitted in FY 2026-27 (by 31 March 2027) | USD 1 million (₹8,80,00,000) | Full annual limit, after tax and the bank's documents |
| Left in the NRO account | ₹3,20,00,000 | Cannot go out in FY 2026-27 without RBI approval |
| Remitted from 1 April 2027 (FY 2027-28) | about USD 363,636 | Uses part of the next year's limit, through the same bank |
Waiting eleven weeks for the new financial year saves an RBI application. If Harpreet had also remitted ₹50 lakh of rent from her NRO account in October 2026, her FY 2026-27 room would have been about ₹8.3 crore, not ₹8.8 crore, because the limit is shared.
Tax forms the bank will ask for
FEMA permission and tax clearance are separate. Para 5 of the Remittance of Assets Master Direction makes every remittance subject to Indian tax law, and the bank will not release money abroad without the income-tax declaration. For remittances governed by the Income-tax Act, 2025 (tax year 2026-27 onwards), that declaration is Form 145, which replaces the old Form 15CA, filed online before each remittance. Where the taxable remittances in the tax year go above ₹5,00,000 and there is no Assessing Officer certificate, Part C of Form 145 applies. Part C needs a chartered accountant's certificate in Form 146, the successor to Form 15CB, filed first.
Whether the sale itself produces taxable income depends on where the land is. Under section 2(14)(iii) of the Income-tax Act, 1961 (sales up to 31 March 2026), agricultural land is not a capital asset unless it lies within a municipality or cantonment board with a population of 10,000 or more. Land within 2 km, 6 km or 8 km of such limits (measured aerially, depending on the population) is also a capital asset. Land outside those limits gives no capital gain.
For a sale from 1 April 2026, check the definition of capital asset in the Income-tax Act, 2025 before taking the same position, and keep the municipal population and distance evidence on file for the Form 146 certificate either way.
If an NRI has already bought farmland
A purchase or gift that breaches rule 24 is a contravention of FEMA. The holder can apply to RBI to compound the contravention, which settles it on payment of a compounding amount. The steps, documents and fee rules are covered in FEMA compounding through RBI. Before applying, confirm when the person actually became non-resident under FEMA: if the land was bought while still resident, section 6(5) protects it and there is nothing to compound.
One more restriction applies by nationality. Under para 9.1 of the Master Direction, citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Macau, Hong Kong and DPRK need prior RBI permission to acquire or transfer immovable property in India, other than on a lease of up to five years. Para 9.2 states that this restriction does not apply to an OCI, so an OCI cardholder who holds one of those passports follows the ordinary NRI and OCI rules above.
