OCI Property Rules: Agricultural Land Ban, Inheritance and RERA Registration

An OCI card holder can buy residential and commercial property in India but cannot buy agricultural land, plantation property or farmhouses under FEMA 21(R) — and can still inherit agricultural land even though they could never buy it. An Overseas Citizen of India is treated like an NRI for immovable-property acquisition, is fully eligible to register as a buyer under RERA, and must present a passport or OCI card for any registration. The ban is on purchase, not on inheritance or holding by succession.

What an OCI Can and Cannot Do With Indian Property

The controlling rule is FEMA 21 — the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations — which places OCIs on the same footing as NRIs: no purchase of agricultural land, plantation property or farmhouses, but full freedom for residential and commercial property.

Why the Ban Is on Purchase, Not Inheritance

The distinction matters more than most people expect. FEMA 21(R) prohibits acquisition of agricultural land, plantation property and farmhouses by an OCI/NRI. But where land devolves by inheritance, will or succession, the OCI receives it by operation of law, not by "acquisition" in the FEMA sense — and the receipt is permitted. So:

• An OCI who inherits a family farm in a village holds it lawfully and can retain, rent or sell it (subject to the sale proceeds repatriation rules).
• The same OCI cannot go out and buy a neighbouring agricultural plot.
• Gifting agricultural land to an OCI is treated like a sale — restricted.

This asymmetry surprises most OCIs planning to "buy back the family land." You can inherit it, but you cannot purchase it.

Worked Example: Rajesh, an OCI in the US

Rajesh holds an OCI card and lives in New Jersey. In FY 2025-26:

1. Buys a flat in Hyderabad (residential):

• Allowed under FEMA 21(R). He books a flat in a RERA-registered project and registers as the buyer — RERA treats an OCI the same as a resident for registration.


• Documents: OCI card, passport, PAN. The sale deed records him as the buyer.


• TDS: since he is an NRI seller? No — he is the buyer here, so 1% TDS under s.194-IA applies on the consideration (buyer-side is not different for an OCI).

2. Tries to buy 2 acres of agricultural land in his ancestral village:

• Not allowed. The bank and the sub-registrar will refuse registration; FEMA 21(R) prohibits the purchase by an OCI. An NRI/OCI cannot take the agricultural land route.

3. Inherits the family farm when his father passes away:

• Allowed. The land devolves to him by succession. He retains it lawfully. If he later sells it, the proceeds can stay in India (NRO) but are not repatriable (agricultural land proceeds are on the non-repatriable list).

4. Receives his mother's flat as a gift:

• Allowed — a gift of residential property from a resident relative to an OCI is permitted. The gift itself may be exempt from tax under s.56(2) if from a relative.

What Documents Are Needed for Registration

For any property purchase or gift registration in India, an OCI must present:

• OCI card (valid, with the "U" visa entry permit if applicable).
• Passport — mandatory identification.
• PAN — required for the transaction, TDS and the ITR.
• RERA registration number of the project (for under-construction flats) — the OCI is registered as a buyer on the RERA website like any resident.

Changed FY 2025-26: For FY 2025-26 the OCI position under FEMA 21(R) is unchanged — residential/commercial purchase allowed, agricultural land/plantation/farmhouse purchase prohibited, inheritance permitted. Confirm the current FEMA notification number and any state-level land rules with your CA and the sub-registrar before completing a purchase.

Tax Points Every OCI Buyer Should Know

• 1% TDS under s.194-IA is deducted by the OCI buyer on any immovable property (other than rural agricultural land) — residential, commercial or otherwise — where the consideration is ₹50 lakh or more. This is the buyer's obligation regardless of citizenship.
• If the OCI later sells as a non-resident, the buyer deducts s.195 TDS on the full consideration at "rates in force." Post-Finance (No.2) Act 2024, LTCG on immovable property is 12.5% without indexation (s.112) for transfers on/after 23-Jul-2024 — the 20%-with-indexation option was preserved only for resident individuals/HUFs, not non-residents. STCG (holding ≤ 24 months) is taxed at applicable slab rates. Add surcharge and 4% cess. (See the NRI property TDS article — verify current CBDT position on s.195 rate before quantifying.)
• Rental income from the Indian flat is taxable in India for the OCI (non-resident) at slab rates, with TDS at 10% under s.194-I (deducted by the tenant, with s.195 as the "rates in force" bridge), subject to DTAA relief.
• Capital gains on sale are India-sourced and taxable in India, subject to DTAA relief.

FAQ

Q1: Can an OCI buy agricultural land in India?
No. Under FEMA 21(R), an OCI (like an NRI) cannot buy agricultural land, plantation property or farmhouses. The purchase is prohibited and registration will be refused.

Q2: Can an OCI inherit agricultural land?
Yes. Inheritance by succession is permitted even though purchase is banned. The OCI holds the inherited land lawfully and can retain, rent or sell it, subject to the non-repatriability of agricultural land proceeds.

Q3: Can an OCI receive property as a gift?
A gift of residential or commercial property from a resident relative is permitted. A gift of agricultural land to an OCI is restricted, as it is treated on par with a purchase.

Q4: Can an OCI register as a buyer under RERA?
Yes. RERA treats an OCI the same as a resident for buyer registration. You need your OCI card, passport and PAN to complete the registration.

Q5: Is there any difference between an NRI and an OCI for property purchase?
For immovable-property acquisition, no — both are prohibited from buying agricultural land, plantations and farmhouses, and both may freely buy residential and commercial property. An OCI also enjoys residence-like benefits (e.g., no visa for stays) but the property rules are the same.

Q6: What documents do I need for property registration as an OCI?
A valid OCI card, passport, PAN, and the RERA registration details of the project. The sub-registrar will also record your overseas address.

Q7: Can I repatriate the sale proceeds of inherited agricultural land?
No. Proceeds from the sale of agricultural land, plantation property and farmhouses are non-repatriable under the FEMA regime, even though the land itself was validly inherited.

Use our FEMA Account Selector to check how your property income and sale proceeds should be routed through the right non-resident accounts.

Sources

• Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations — FEMA 21(R) — OCI/NRI property acquisition.
• Section 194-IA, Income-tax Act 1961 — 1% TDS on buyer of residential property.
• Section 195, Income-tax Act 1961 — TDS on rent/gains paid to non-residents.
• RERA Act, 2016 — buyer registration eligibility.

Know the difference between purchase and inheritance before you sign anything — the FEMA line is sharp. Book a consultation at harunraaj.com.

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See Also

• "Every foreign remittance needs a CA certificate": What ITA 2025 actually says
• "Any LRS transfer above Rs.7 lakh attracts 20% TCS": What ITA 2025 actually says
• Am I NRI or Resident? 182-Day, 120-Day and ₹15 Lakh India-Income Test Explained

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