The question arrives in a predictable form. A parent has died, there is farmland in a village, and the heir has lived abroad for twenty years and holds an OCI card. Can they keep it?
Yes. Inheritance is the clear exception to a rule that is otherwise firm.
The rule, and the exception
Under India's foreign exchange framework, a person resident outside India -- including NRIs and OCI cardholders -- cannot purchase agricultural land, plantation property or a farmhouse. This is covered in what FEMA allows NRIs, and it holds regardless of state law. Karnataka's 2020 relaxation of Sections 79A and 79B changed who counts as an eligible purchaser under state land reform law; it did not touch the central restriction.
Inheritance is treated differently from purchase. An NRI or OCI cardholder may acquire agricultural land by inheritance from a person resident in India. The restriction targets acquisition by purchase, not succession.
You may also generally retain agricultural land you owned before becoming a non-resident.
What you can do with inherited farmland
Hold it. You can continue to own it indefinitely. There is no requirement to dispose of inherited agricultural land within any period.
Have it cultivated. You can lease or license it for cultivation, subject to state tenancy law -- and state tenancy law is the constraint that matters. Several states restrict or regulate agricultural leasing, and a long-running informal tenancy can create rights in the cultivator that are difficult to unwind. This is precisely the risk that makes the RTC's cultivator and tenancy entries so important. If you are letting someone farm inherited land, document the arrangement and take advice on the tenancy position in that state.
Sell it -- but only to a resident Indian. This is the significant limitation. Agricultural land held by a non-resident may generally be transferred only to a person resident in India who is eligible to hold it. You cannot sell inherited farmland to another NRI or OCI holder. Your buyer pool is restricted to resident Indians, which affects both liquidity and price.
Gift it to a resident relative. Gift to a person resident in India is generally available where sale is.
Repatriating the proceeds
Selling is one question; moving the money out is another.
Sale proceeds are credited to an NRO account. Repatriation from NRO balances is subject to an annual limit -- widely applied at USD 1 million per financial year across all NRO sources -- and requires certification of tax compliance through the prescribed forms: from 1 April 2026, Form 145 and a chartered accountant's certificate on Form 146 (Forms 15CA and 15CB before that date).
Where the property was acquired by inheritance rather than purchased with foreign currency, repatriation runs through this NRO route and its annual cap rather than through any purchase-linked entitlement.
Limits, forms and conditions here are revised periodically. Confirm the current position with a chartered accountant experienced in NRI matters before you transact -- this guide orients you, it does not substitute for that advice.
Tax on the sale
Two points that surprise people.
Inheriting is not a taxable event. No tax arises on receiving the property. Your cost of acquisition is generally the previous owner's cost, and the holding period typically includes theirs -- which usually means a long-term gain.
Rural agricultural land may fall outside "capital asset". Agricultural land meeting the statutory tests for rural land -- based on distance from municipal limits and the population of the nearest municipality -- is excluded from the definition of a capital asset, so gains on its sale are not charged as capital gains. Land failing those tests is a capital asset and is taxed normally.
This distinction is worth real money and it turns on measured distance and census population, not on how rural the land feels. See capital gains on agricultural land and Section 54B. Note also that TDS obligations on a purchase from a non-resident differ from those on a resident sale, which your buyer will need to handle correctly.
Getting the records into your name
Inheritance abroad does not update Indian land records by itself. Expect to need the death certificate, proof of relationship, a legal heirship or succession certificate, and a will where one exists, followed by mutation of the revenue record.
Where there are multiple heirs, the land is held jointly until partitioned, and every heir must join in any sale. Tracing and obtaining consent from siblings and cousins spread across several countries is the single biggest practical obstacle in these transactions. Start it early.
If you will not be in India to execute documents, you will likely need a power of attorney -- executed at an Indian mission, then adjudicated and stamped in India.
A note on farmhouses and plantations
The restriction covers agricultural land, plantation property and farmhouses alike. Residential and commercial property is a different matter entirely: NRIs and OCI holders can buy those freely, which is why a converted plot is treated differently from the farmland it used to be. See NA conversion and agricultural versus commercial land.
Converting inherited agricultural land while holding it as a non-resident is a question to put to a lawyer before starting -- the conversion applicant must be the owner, and the owner here is restricted.
Browse listings your buyer pool can transact in: farmland near Mangalore or residential plots around Kochi.
This article is general information, not legal advice. Land laws and eligibility rules vary by Indian state and change over time -- verify current requirements with a local property lawyer before making any purchase decision.
Written by
Agriva Editorial
The Agriva Editorial team writes practical, field-tested guides for buyers, sellers, and brokers navigating India's farmland and niche real estate market.