Key Factors to Consider When Purchasing Agricultural Land in India

According to Sathish, a property consultant at South Zone Realty Consulting Pvt. Ltd., “investment rules for agricultural land in India vary among states due to the diverse geographical topographies, from eligibility criteria to land ceiling norms. To prevent future legal issues and losses, it is crucial for buyers to be knowledgeable about these state-specific investment regulations. Due to legal irregularities in the land acquisition process, the government has, on numerous occasions in the past, repossessed properties or severely fined purchasers.

Tips for buying agricultural land

Eligibility Requirements

The requirements for purchasing agricultural land vary from state to state. Tamil Nadu allows anyone to purchase agricultural land, however, there are some limitations in Gujarat, Maharashtra, and Karnataka. For instance, the 2015 amendment to Sections 79 A and 79 B of the Karnataka Land Reforms Act 1961 limits the purchase of agricultural land to either a state-based agriculturist or someone with a history in agriculture. Also, the buyer’s non-agricultural income cannot be greater than Rs 25 lakh annually.

Purchase of agricultural land is also restricted for Non-Resident Indians (NRIs), People of Indian Origin (PIOs), overseas citizens of India (OCIs), and foreign nationals. NRIs, OCIs, and PIOs are permitted to purchase any type of moveable property in India, with the exception of agricultural land, farmhouses, and plantation land, in accordance with the Foreign Exchange Management (Acquisition and Transfer of Immovable Property Outside India) Rules, 2015. Only their forebears can leave them the land.

State-wise land laws

Land ceiling 

The amount of agricultural land that a buyer is permitted to purchase is known as the land ceiling, and the standards differ greatly between regions. To avoid fraud and legal inconsistencies, it is crucial to be aware of these land-ceiling regulations.

Conversion of land

“Before beginning any development, agricultural property must be converted into residential land. Wetlands cannot be converted; only dry pastures can be used for land conversion, Sathish continues.

Send an application for a “change of land use” along with an explanation of the conversion’s justification to the commissioner of the land revenue department. Include a copy of your identity evidence, a letter of mutation, the original sale document, tax payment receipts, and a photocopy of the survey map for verification. Also, a cost that may vary from state to state is required for the conversion process.

Get through the legal obstacles

Special approval would be needed to transfer ownership rights if the agricultural land was given by the government. Also, the property should be fully in the owner’s possession. For instance, a landowner’s caretaker or guardian who is a minor cannot sell the property because they do not have complete ownership rights. Agricultural land that is leased is also ineligible for transfer. The government may even take the property in the event that the lessee transfers it dishonestly, in addition to punishing him.

Required documents to purchase agricultural land 

The land’s title deed

This document is required to verify the seller’s legitimacy, particularly if there are many owners. To ensure that all of the owners agree to the transaction, the buyer must confirm the paperwork. The buyer must verify that his name appears in the official village records when the sale is finalized.

Sale contract

The buyer and seller both sign the sale agreement, which outlines all the specifics of the transaction. Once the deal is finished, it guarantees the transfer of the property.

Stamp duty 

In accordance with the state’s regulations, stamp duty must be paid. From one state to another, this sum may be different.

Registration

The terms and circumstances of the property transfer to the buyer’s name are contained in the paperwork that is signed at the registrar’s office. In the presence of two witnesses, both parties sign the contract. The original title deed, the house tax receipts, and information about the property are typically included in the paperwork.

Tax bills and receipts

It is the buyer’s duty to check all prior paperwork, statements, and tax receipts to confirm that the property is free and clear of any outstanding debts.

Encumcrance certificate (EC)

An Encumbrance Certificate that the property is free from any financial or legal disputes. The EC must be picked up by the purchaser from the sub-registrar’s office.

Certificate of Land Measurement

It is the certificate indicating that land measurements are in accordance with the data mentioned in the title deed, which must be obtained from registered surveyor. 

Power of attorney 

NRIs cannot buy agricultural land for themselves, although they are able to sell whatever land they have inherited. An authorized, reliable third party who would represent the sale should be given a power of attorney. The paperwork must be acknowledged and signed by a representative of the Indian embassy in the country where the seller is located.

Before finalizing the purchase, prospective buyers of agricultural property in Gujarat and Maharashtra should review supplementary documents such as the 7/12 and 8A extracts.

Zoning for agriculture

The government frequently creates zones to designate certain areas as land. Zoning is used to encourage strategic development and guarantee that the property is used to its full potential given its kind. Shades of yellow, for instance, indicate the usage of land for residential purposes, whereas red designates the development of facilities like those for religious and educational purposes. Similar to how light and dark blue represent commercial land lots for offices, business centres, and retail facilities like restaurants, malls, and movie theatres.

The colour “Green” is utilised for agricultural and landscaping tasks. A town planning scheme or a city’s master plan may use various shades of green to represent a forest, lake, valley, pond, garden, agricultural area, or cemetery.

It is essential to understand the rules governing the selling and purchase of agricultural land in a State. In the event that there are many owners, the buyer should be cautious about the paperwork and double-check the title deed, land agreement, encumbrance certificate, and release certificate. Understanding the validity of the documents is essential for thwarting fraud.

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