By S&S Co. Advocates & Solicitors · Published 16 October 2026 · Informational content, not legal advice: see our disclaimer
Every NRI who has spent time looking at property back home has run into some version of the same advertisement: a farmhouse an hour outside a major city, sold as a weekend retreat, often on what is actually agricultural land. The person selling it rarely mentions that an NRI or OCI buying that property through a straight purchase is doing something FEMA does not permit, and that the consequences of finding out later, after money has changed hands, are considerably worse than finding out before.
This guide sets out what the RBI's Master Direction on acquisition and transfer of immovable property actually says about agricultural land, plantation property and farmhouses, where inheritance changes the answer, and what happens when an NRI eventually wants to sell.
The core rule: purchase is barred, most other property is not
Under the RBI's consolidated Master Direction, an NRI or an OCI can acquire by purchase any immovable property in India other than agricultural land, plantation property or a farmhouse. Residential and commercial property, including flats, independent houses and commercial units, fall well within what an NRI or OCI can freely buy, subject to the usual payment channel rules. The three excluded categories, agricultural land, plantation property and farmhouse, are carved out specifically and deliberately, and the exclusion does not turn on how the property is marketed or what it is called in a sale brochure; it turns on the actual land classification and permitted use under the relevant state land records.
This is why a property marketed as a farmhouse can sit on either side of the line. If the underlying land is classified as agricultural in the revenue records, the FEMA bar applies regardless of how the structure on it is described or used, and a sale to an NRI purchaser in that situation is not simply a compliance technicality to clean up later; it is a transaction the law does not permit in the first place.
A buyer's agent or a seller eager to close a deal will rarely raise this point unprompted, which is why the practical burden falls on the NRI purchaser to pull the revenue record, usually the record of rights or the equivalent land register entry for that state, before signing anything. Where the classification is genuinely ambiguous, for instance land that was agricultural years ago but has since gone through a formal conversion process to non-agricultural use, the conversion order itself becomes the document that actually determines whether the FEMA bar applies, and a buyer should ask for that order rather than accepting a seller's assurance that the land is 'basically residential now'.
Gifts follow the same exclusion
An NRI or OCI can acquire immovable property by way of gift from a person resident in India, or from an NRI or OCI who is a relative as defined under the Companies Act, 2013, but this gift route carries exactly the same carve-out: agricultural land, plantation property and farmhouses are excluded from what can be gifted to an NRI or OCI in the same way they are excluded from purchase. Sources diverge on whether a gift of such property from a resident relative is ever permitted under any circumstance, and given that conflict in the secondary commentary, this should be checked directly against the current Master Direction text, or with an authorised dealer bank, before any family relies on a gift as a workaround for the purchase restriction.
Inheritance is the real exception
Inheritance sits apart from purchase and gift. An NRI or OCI can acquire any immovable property in India by inheritance, including agricultural land, plantation property or a farmhouse, from a person resident in India, and separately from a person resident outside India provided that person had themselves acquired the property in accordance with the foreign exchange law in force at the time of that earlier acquisition. This is the route that lets an NRI end up owning agricultural land perfectly legitimately, simply by inheriting it from a resident Indian parent or relative, even though the same NRI could never have bought that land directly.
Holding inherited agricultural land is not itself restricted; an NRI heir does not have to sell it within any fixed period or face a forced divestment requirement. The restriction surfaces only at the next transfer.
Reselling inherited agricultural land: only to a resident
Once an NRI or OCI holds agricultural land, plantation property or a farmhouse through inheritance, the Master Direction permits transfer of that property only to a person resident in India. It cannot be transferred to another NRI or OCI, even one who is a close relative, which closes off a transfer route that works perfectly well for ordinary residential or commercial property between NRIs. A family with multiple NRI siblings who jointly inherit agricultural land, and who want to consolidate ownership in one sibling who happens to also be an NRI, runs directly into this restriction and typically needs to restructure the transaction, usually by having a resident family member acquire the share instead, or by selling outright to an unrelated resident buyer.
Sale proceeds, once the land is sold to a qualifying resident buyer, generally follow the ordinary NRO account and repatriation framework applicable to inherited property sales, subject to the usual documentation on how the property was acquired and the applicable tax clearance.
What becomes possible once the NRI actually returns
The entire framework described above applies to a person who is, in FEMA's terms, a person resident outside India. The moment an individual genuinely relocates to India with the intention to stay, and meets the residency conditions under FEMA, the bar on buying agricultural land simply stops applying to that person going forward, because they are no longer an NRI or OCI for this purpose; they are a resident, subject to whatever state-level agricultural land ownership rules apply to residents generally, which is a separate and distinct body of law, including state ceiling limits and, in several states, restrictions tied to whether the buyer is themselves classified as an agriculturist.
This return-based route is worth flagging clearly to clients who are planning an eventual move back, since the timing of a land purchase relative to the actual change in residential status can determine whether the purchase is compliant or not, and getting this sequencing wrong, buying before residency genuinely changes, is one of the more common and entirely avoidable compliance failures in this area.
Frequently Asked Questions
Can my parents gift me their farm while I am still an NRI?
This is genuinely unsettled in the available commentary, with sources disagreeing on whether a gift of agricultural land to an NRI from a resident relative is permitted at all. Given that uncertainty, confirm the current position with an authorised dealer bank or directly against the latest RBI Master Direction text before relying on a gift as a route around the purchase restriction.
I am an NRI and I inherited agricultural land from my late father. Can I sell it to my NRI brother?
No. Inherited agricultural land, plantation property or a farmhouse held by an NRI or OCI can be transferred only to a person resident in India, not to another NRI or OCI even if that person is a sibling or other close relative. A resident family member, or an unrelated resident buyer, would need to be the purchaser instead.
Does buying a 'farmhouse' near a city always count as agricultural land for this purpose?
It depends on how the underlying land is classified in the state's revenue records, not on the marketing description. A structure sold as a farmhouse can sit on land classified as agricultural, in which case the FEMA restriction applies regardless of the name used in the brochure, so the land classification needs to be checked directly before any NRI purchase.
If I move back to India permanently, can I then buy agricultural land?
Once you genuinely become a person resident in India under FEMA, the NRI/OCI restriction on buying agricultural land no longer applies to you, though you then become subject to whatever state-level rules govern agricultural land ownership for residents, including ceiling limits and, in some states, agriculturist-status requirements.
References & Further Reading
The provisions and rulings below were relied on for this guide. The position can change with amendments and later decisions, so check the current text and the latest case law before acting on any of it.
- Foreign Exchange Management Act, 1999 and RBI Master Direction on Acquisition and Transfer of Immovable Property (Master Direction No. 12), restrictions on NRI/OCI acquisition of agricultural land, plantation property and farmhouse
- RBI Master Direction provisions on acquisition by inheritance and restrictions on subsequent transfer of inherited agricultural land by an NRI/OCI only to a person resident in India
- Foreign Exchange Management (Non-debt Instruments) Rules, 2019