By Girish Chhalwani, Co-Founder, Lords of the Lands · 20+ years in Maharashtra land acquisition, tenure and plotted development · 8 min read · Last updated 23 September 2026

This is the single most misunderstood rule affecting NRI land buyers in India, and the misunderstanding runs in both directions. Some buyers believe they cannot buy land at all, which is wrong and costs them opportunities. Others believe the bar can be worked around with a conversion promise or a resident relative’s name, which is also wrong and costs them a great deal more.

What exactly is barred?

The purchase of three categories only — agricultural land, plantation property and a farm house — while flats, offices, shops, industrial property and non-agricultural plots are all permitted without RBI approval; the bar is on purchase, not on inheritance.

Purchase of three categories: agricultural land, plantation property, and a farm house. Everything else — flats, offices, shops, industrial property, and non-agricultural plots of land — is permitted for an NRI or OCI cardholder without RBI permission.

The bar is on acquisition by purchase. Inheritance is separately permitted, including for these three categories, which is why so many NRIs lawfully hold ancestral farmland they could not have bought.

Why does the restriction exist?

It is the overlap of two independent policies — state control over who may hold farmland, which applies to residents too, and exchange control’s refusal to open a capital route into a restricted asset class — which is why there is no realistic approval route, not a formality awaiting the right application.

Two policy strands, neither of which is about NRIs specifically.

Agricultural land policy is a state subject with its own logic. Indian states have long restricted who may hold farmland — often to agriculturists, sometimes with ceiling limits and fragmentation rules — to protect cultivation and limit speculative accumulation. Maharashtra has its own restrictions under the Maharashtra Land Revenue Code and the tenancy legislation, and these apply to residents too.

Exchange control does not want capital account routes into a restricted asset class. If non-residents could freely buy farmland, the state-level restrictions would be bypassed by anyone with an overseas address.

Understanding this matters practically, because it tells you the restriction is not a formality waiting for the right application. It is the overlap of two independent policies, which is why there is no realistic approval route.

What counts as agricultural land?

The record and the planning position, not what the ground looks like: land recorded as agricultural on the 7/12 — even with a layout sanction merely applied for — is agricultural land, while a plot in a sanctioned non-agricultural layout or one converted with a valid Sanad is not.

This is the operative question, and it is answered by the record and the planning position, not by what the ground looks like.

The middle rows are where transactions go wrong. A sanction that has been applied for is not a sanction. An assurance that the land “will be NA before registration” is a promise, and you would be acquiring the parcel in its actual character, whatever the agreement says about intentions.

What are the workarounds people try, and why do they fail?

Buying in a resident relative’s name, an agreement now with conveyance after conversion, a long lease, holding through a company or LLP, or converting after purchase — each fails because permissibility is tested at acquisition, and several breach separate laws such as the benami prohibition or state tenancy law.

Five workarounds proposed and why each fails

All of these are attempted. None of them is advice; they are listed so you recognise them when they are proposed to you.

Buying in a resident relative’s name. If the relative is the real owner, you do not own the land. If they hold it for you, that is a benami arrangement, which attracts its own prohibition and penalties entirely separate from FEMA.

An agreement to sell now, conveyance after conversion. Paying substantially the whole consideration and taking possession of agricultural land is acquisition in substance, whatever the document is titled.

A long lease instead of a purchase. Leasing is treated differently from purchase, but a long lease that transfers substantially all rights invites scrutiny, and agricultural tenancy law in Maharashtra has its own consequences that can surprise both sides.

A company or LLP holding the land. Downstream investment rules and state land law both apply, and this is complex rather than clever. Take proper advice if there is a genuine commercial structure; do not use it as a device.

Converting after purchase. The FEMA question is asked at acquisition. Converting afterwards does not cure an acquisition that was not permitted.

An NRI cannot buy agricultural land — so what can they buy?

A plot in a sanctioned non-agricultural layout — permitted, verifiable and easier to build on and resell — after establishing the 7/12 status, the layout sanction covering your plot, the MahaRERA entry, the premium position, recorded legal access and the parent-parcel title chain.

For most NRIs who want land exposure near Mumbai, the answer is a plot in a sanctioned non-agricultural layout. It is permitted, it is verifiable, and it happens to be the version of land that is easier to build on and easier to resell anyway.

Six-step check before paying anything on a non-agricultural plot

What to establish before paying anything:

1. The current 7/12 extract and what it records the land as.
2. The layout sanction from the planning authority with jurisdiction, and that your plot number is inside it.
3. The MahaRERA registration entry, and that the registered survey numbers match your plot.
4. The premium position, and who bears it.
5. Legal access of adequate width, recorded.
6. The title chain and mutation position at parent-parcel level.

That list is not NRI-specific. It is the ordinary diligence sequence — but for an NRI, item one carries an extra consequence, because it determines whether you are permitted to buy at all.

What if you inherit agricultural land?

You may hold it, but your options are narrower: inherited agricultural land can be transferred only to a resident Indian citizen, repatriation of any sale proceeds is subject to conditions and documentation, and state tenancy and revenue law govern how you may use it.

Four constraints on inherited agricultural land

You may hold it. What you may do with it is narrower than an ordinary owner’s position:

• Transfer. Agricultural land may be transferred only to a person resident in India who is an Indian citizen.
• Sale proceeds. Repatriation of proceeds from inherited property is subject to conditions and limits, and typically needs documentation and a chartered accountant’s certification.
• State law. Maharashtra’s own restrictions on who may hold and acquire agricultural land continue to apply to the transfer.
• Holding it productively. Cultivation, leasing and use are governed by state tenancy and revenue law, which can attach consequences to a tenancy you did not intend to create.

Inherited farmland is a common and entirely lawful position. It is also one where taking advice before acting is cheaper than acting and then taking advice.

What are the risks of getting this wrong?

A FEMA contravention with penalty exposure and slow regularisation, a title a future buyer’s advocate will reject, benami exposure if held in another’s name, blocked repatriation without a clean acquisition and payment trail, and in practice no worthwhile remedy against the seller.

The acquisition is not permitted. A contravention of FEMA carries penalty exposure, and the position has to be regularised, which is slow and uncertain.

The title is unmarketable. A future buyer’s advocate will find the same problem, which means your exit is impaired even if nothing else happens.

Benami exposure. Holding through someone else’s name is a separate and serious prohibition.

Repatriation blocked. Without a clean acquisition and payment trail, getting proceeds out later is the point at which the problem surfaces.

No practical remedy against the seller. A seller who told you conversion was coming is rarely worth suing.

How Lords of the Lands handles this

Frequently asked questions

Related reading

For NRI and OCI buyers

• Can an NRI buy land in India? — the full permitted-versus-barred picture
• The NRI document checklist — papers to line up before you remit
• Can an NRI buy land in Maharashtra? — the state-specific version of these rules

What counts as agricultural, and NA status

• What NA land actually is — the status that makes a plot buyable
• NA plot vs agricultural land — the distinction the whole bar turns on
• Maharashtra has scrapped separate NA permission — how conversion works now
• Deemed NA through plan approval — status via sanction, not a separate order
• Is the NA Sanad still required? — what the record must show
• The one-time NA premium — the cost and who bears it
• How to check a plot’s NA status — confirm, do not assume
• How to read a 7/12 extract — where the recorded status appears

Tenure, title and documents

• Class I vs Class II tenure — the state-law layer beyond FEMA
• The documents to check, in order — the diligence sequence
• Title due-diligence checklist — a clean, marketable chain
• The 7/12 other-rights column — the encumbrances buyers miss
• RERA verification for plotted land — the checkable fact, not a promise

What you can buy, and where

• Land vs plotted development — why a sanctioned layout resolves the question
• Building a house on an NA plot — what the permitted category lets you do
• A farmhouse on agricultural land — why the “farm plot” pitch is a trap
• The Khopoli-Pali road (SH-93) guide — our core corridor, survey by survey
• Karjat land prices in 2026 — a popular plotted belt
• What Lords of the Lands builds — sanctioned NA layouts, status established not promised

Citations and sources

Sources: Foreign Exchange Management Act, 1999, Section 6(5); Foreign Exchange Management (Non-debt Instruments) Rules, 2019, Rule 24 (exclusion of agricultural land, plantation property and farm houses from permitted acquisition; inheritance; transfer of agricultural land only to a person resident in India who is an Indian citizen); Prohibition of Benami Property Transactions Act, 1988; Maharashtra Land Revenue Code, 1966; Bombay Tenancy and Agricultural Lands Act, 1948. This article is general information current as of September 2026 and is not legal, tax or investment advice. Take advice from an advocate and a chartered accountant on your own facts before transacting. Official sources: RBI (FEMA / NRI) · Mahabhumi 7/12 (Bhulekh).