Land has always been a preferred investment choice among risk-averse buyers, mainly due to the issues related to untimely deliveries in case of under-construction properties and the high cost of ready homes. The sentiment has spiralled up further post the COVID-19 crisis. The pandemic has reinforced the popularity of land parcels, especially the agricultural land on the city outskirts. However, before making a decision, knowing the tips governing the sale and purchase of agricultural land is crucial.

According to Sathish, Property Consultant, South Zone Realty Consulting Pvt Ltd, “From eligibility criteria to land ceiling norms, investment rules for agricultural land in India vary across States due to the different geographical topographies. As a buyer, it is essential to stay well-informed about these investment guidelines in your State to avoid legal disputes and losses in future. There have been several instances in the past where the government authorities have seized lands or imposed hefty penalties on buyers owing to the legal discrepancies in the land acquisition process.”

Tips for agricultural land purchase

Eligibility criteria

The guidelines for agricultural land purchase differ from one State to another. While anyone can buy agricultural land in Tamil Nadu, the States of Gujarat, Maharashtra and Karnataka entail a few restrictions. For instance, Sections 79 A and 79 B of the Karnataka Land Reforms Act 1961, amended in 2015, restrict the purchase of agricultural land only to a State-based agriculturist or those who have an agricultural background. Besides, the income of the buyer from a non-agriculture occupation should not exceed more than Rs 25 lakh per annum.

The Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs), Overseas Citizens of India (OCIs) and foreign citizens also face restrictions with respect to agricultural land purchase. According to the Foreign Exchange Management (Acquisition and transfer of immovable property outside India) Regulations, 2015, NRIs, OCIs and PIOs may acquire any immovable property in India except agricultural land/farmhouse/plantation land. They can only inherit the land from their ancestors.

State-wise land laws

StateLand laws
Tamil NaduMaximum of 59.95 acres of agricultural land can be purchased.
In case of no agricultural activity in the last 10 years, the land can be converted into non-agricultural one by order of the district collector
KarnatakaNon-farmers with a maximum annual income of Rs 25 lakh can purchase the agricultural land
Necessary approvals from the Deputy Commissioner must be sought before making the investment
Investor is not allowed to convert the land
It is essential to begin farming on the land within one year from the date of purchase
If farming is stopped on the land within five years of the purchase, the State government is authorised to confiscate the land
KeralaAnyone except NRIs can purchase agricultural land
For an adult unmarried or an only surviving member of the family, the ceiling limit is 7.5 acres
For a family of two to five persons, the ceiling limit is 15 acres
For a family of over five, the ceiling limit is 20 acres
MaharashtraOnly farmers can buy agricultural land
If one of the parents or grandparents is a farmer, the person is also deemed a farmer
In addition to any other agricultural land anywhere in India, the person can purchase it in the said state
Maximum of 54 acres of agricultural land can be purchased
GujaratOnly an agriculturalist can purchase such land
Any farmer across the country can invest in agricultural land
RajasthanAnyone can buy agricultural land except for NRIs and PIOs
For non-agricultural activities, the land needs to be converted within one year from the date of purchase
The non-agricultural activity should begin on the land within three years from the date of conversion
Madhya PradeshAnyone can buy agricultural land except for NRIs and PIOs
HaryanaAnyone except NRIs can invest here
Certain areas are known as Controlled Areas
For buyers, except NRIs, a certificate entailing the change of land-use is to be obtained from the State for non-agricultural activities
Himachal PradeshA non-agriculturalist cannot purchase agricultural land
The investor needs to be from the state
Non-agricultural land may be obtained post due permissions from the State under Section 118 of the Himachal Pradesh Tenancy and Land Reforms Act, 1972
West BengalAs per the West Bengal Land Reforms Act, a maximum of 17.5 acres of irrigated land and 24.5 acres of rainfed land can be purchased for private ownership
In urban areas, a maximum of 7.5 kottah is eligible for purchase
Land types exempted from the Land Reforms Act- tea gardens, mills, workshops, livestock, breeding and poultry farms, dairies, and townships
Andhra PradeshNon-farmers can also purchase land
A family unit (individual, spouse and three minors) can purchase a maximum of 10 acres of Class A land (irrigated and double-cropped wetland)
A family unit can purchase at most 54 acres of Class K land (dry and non-irrigated land)
Uttar PradeshAnyone, excluding NRIs can invest in agricultural land
The ceiling limit is 12.5 acres

Land ceiling

The land ceiling is the maximum agricultural land a buyer can own, and the norms vary substantially across territories. Knowing these land-ceiling norms is essential to prevent fraudulent activities by the sellers and legal discrepancies.

Land conversion

“Conversion of agricultural land into residential land is essential before undertaking any development. However, a wetland cannot be converted; only dry pastures are applicable for conversion of land”, adds Sathish.

To apply for a ‘change of land use’, submit an application to the commissioner of the land revenue department, explaining the reason for conversion. Also, attach a copy of identity proof, mutation letter, original sale deed, receipts of tax paid and the photocopy of the survey map for verification. Besides, the conversion process involves a fee that may differ from one State to another. 

If the agricultural land is Government-allotted, special permission would be required to transfer the ownership rights. Also, the owner of the land should have full-fledged possession of the property. For instance, a caretaker or the guardian of the landowner who is a minor cannot sell the property since he does not have full rights to the property. Moreover, leased agricultural land is not eligible for transfer. In case the lessee transfers the property deceitfully, not only will he be penalised, but the government authorities may also seize the property.

Documents needed for agricultural land purchase

The title deed of the land

This document is needed to check the authenticity of the seller, especially in case there is more than one owner. The buyer must verify the document to ensure that all the owners consent to the transaction. Once the sale is completed, the buyer must check if his name is reflecting in the official village records.

Sale agreement

The sale agreement details all the intricacies of the transaction and is signed by the buyer and seller. It promises the transfer of the property once the transaction is complete.

Stamp duty

A stamp duty is paid as per the directive of the State where the land is located. This amount can vary from one State to another.

Registration

It is the signing of the document at the registrar’s office that contains the terms and conditions of the property transfer to the buyer’s name. Both the parties sign the document in the presence of two witnesses. The documents generally include the house tax receipts, the original title deed, and property details.

Tax receipts and bills

It is the buyer’s responsibility to seek all previous documents, invoices and tax receipts to ensure there are no outstanding dues on the property.

Encumbrance certificate (EC)

An Encumbrance Certificate is a document that certifies that a property is free from any legal or monetary disputes. The buyer must obtain the EC from the sub-registrar’s office.

Land measurement certificate

A certificate stating that the land measurements are as per the data mentioned in the title deed must be obtained from a registered surveyor.

Power of attorney

NRIs may not purchase agricultural land themselves, but they can sell the land inherited by them. A power of attorney should be bestowed on an authorised trustworthy third party who would act on behalf of the seller. The document should be recognised and signed by an officer of the Indian embassy, where the seller resides.

For those interested in purchasing agricultural land in Maharashtra and Gujarat, additional documents like 7/12 and 8A extracts should be checked before closing the deal.

Agricultural zoning

The Government often divides specific areas as zones to dedicate the land usage there. Zoning is done to promote strategic development and ensure that based on the type of land, it is put to optimum use. For example, shades of yellow signify residential use of land, while red is dedicated for the development of structures like religious and educational. Similarly, light and dark blue symbolise commercial land parcels for business hubs, offices, and retail infrastructure, like eateries, shopping malls and cinema halls.

For agricultural and greenery-maintenance activities, the colour ‘Green’ is used. Shades of green in a town planning scheme or a city’s master plan may denote forest, lake, valley, pond, garden, agriculture and cemetery.

Understanding the guidelines for the sale and purchase of agricultural land in a State is necessary. A buyer should be vigilant about the documents and verify the title deed, land agreement, encumbrance certificate and release certificate in case there is more than one owner. Knowing the authenticity of the documents is a must to keep the fraudsters at bay.

Check land records state-wise in India

Check land records in Delhi 

Check land records in Uttar Pradesh

Check land records in Bihar

Check land records in Jharkhand

Check land records in Maharashtra