Chances of obtaining approval for sale of agricultural land to NRI are bleak
2) your father can bequeath land to you by will
Father selling land to NRI son to repay loan
Hello, First of all, I would like to thank you all for making the law available at the fingertips. I am an NRI living out side of India for 8years, I’ve loaned my father some money over the years (have all the bank transactions), my father do not have money to pay me back now but he’s willing to sell me his agricultural land. I am aware that NRI’s have some restrictions to buy agri properties, need to get approval from RBI. I have found below info in the RBI site, can you please help me understand how this process works? and what the chances that RBI approves my petition? “All requests for acquisition of agricultural land/plantation property/ farm house by any person resident outside India or foreign nationals may be made to The Chief General Manager, Reserve Bank of India, Central Office, Exchange Control Department, Foreign Investment Division (III), Mumbai 400 001.” Thanks!
Asked 3 years ago in Property Law
Religion: Hindu
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19 Answers
There is a restriction against NRIs from acquiring agricultural lands in India for which RBI's permission has to be taken
But in my view there is no restriction against a father who is an Indian citizen from gifting his agricultural land to his NRI son
Similarly such a restriction does not apply when a NRI inherits agricultural land from his ancestor
So either your father make a gift deed in your favour or Will this land to you
This will not require any application to be made to RBI
The loan money can then be written down in your books of account (preferably prior to executing the gift deed, if a lifetime transfer is contemplated by the parties)
In order that your father does not have to pay any income tax on this loan money upon it's being written down as above, you can make an affidavit stating that you have gifted that money to your father. Cash gift from son to father is an exempted income which is not charged to tax in the hands of the donee
- As per FEMA21/2000 RBI rules , an NRI or PIO cannot buy agricultural land /farm house/plantation property in India.
- If you will purchase an agriculture land in India , then it will be a violation of FEMA laws , that can result in a penalty or even confutation of that property.
- Further, to purchase an agricultural property in India, an NRI has to take a prior approval from Reserve Bank of India, However you can acquire this property only by way of inheritance.
- Hence, you can get that agriculture property by way of gift deed or a WILL from your father.
The statement mentioned by the RBI is also same , that NRI will have to take approval from the RBI ,and for the same the person may contact in Mumbai office of RBI.
Chances are fair you can try. First you need to apply with details then the verifiable will take place from their side
Please check if any application form can be uploaded for the purpose on the RBI website. Alternatively, you may submit the application through your India-based bank (Certainly, you may have an NRI account with them).
Even though there is a provision to seek permission from RBI to purchase an agricultural land by a NRI, it is a very lengthy and tedious process, and there is no confirmation that you may get permission for this reason.
If the RBI route is not possible or feasible you may ask your father to sell the property and to transfer the proceeds to your account after which you can issue a no due certificate acknowledging the discharge of loan by him.
There is no bar in inheriting agricultural property by a non resident Indian. Your father cannot sell it to you, but it can be willed. Also, you can execute a gift deed in your favour gifting his share of the property to him. The gift deed needs to be mandatory registered after payment of requisite stamp duty at sub registrar office in the presence of two witnesses.
Dear client,
it is extremely rare for an NRI to get approval from the RBI about the sale of an agricultural land.
Thank you
1. Your father can file an application before the RBI official for availing leave to sell you his agricultural land.
2. Till the leave is obtained, he can not sell the said land.
Thank you all for the response. Can my father sell (not gift) his self acquired property to my mother? Will there be any legal obligations with this sale?
Asked 3 years ago
Your mother should have independent source of income to purchase the property from your father otherwise it may be considered as a sham sale deed and when challenged, it may become invalid.
He can transfer it to her by a gift settlement deed instead of selling it.
Can I pay on behalf of her? Or loan her?
Asked 3 years ago
Father is at liberty to sell his self acquired property to mother
You are at liberty to grant mother loan for purchase of property
Yes he can do anything with his self acquired property. No binding.
Yes you can pay
You can give this amount as loan to your mother by executing a loan agreement duly attested/ witnessed by two witnesses.
She can show the source of income as this loan amount.
Between close blood relatives, sale of a property will be an oddity and not legally acceptable. Your father has to execute a gift deed in your mother's favour. Either your father may gift the property to your mother or write a Will bequeathing it to you or to your mother.
Dear client,
If your father is willing to sell his self acquired property to your mother on his own will without any pressure or coercion then it is legal. You can pay on behalf of her.
Thank you.
Your father is at liberty to sell his land to your mother.
You can show the amount at loan provided to your mother to be repaid by her in due course or just show the amount as your gift to her.
- If your mother is home lady then legally she cannot purchase the property from your father , except a gift deed.
- However, you can purchase in her name after paying fund for the same.