How To Buy Farmland For Non-Farming Activities

How To Buy Farmland For Non-Farming Activities

How To Buy Farmland For Non-Farming Activities

Across India, only agriculturists are allowed to buy farmland mainly because allowing such purchases by non-agriculturists would mean a threat to the agriculture sector altogether. However, various states have amended their land use laws and allowed some liberty.


Buying farmland in Maharashtra was only limited to those engaged in farming in until 2016, when an amendment was made to the Maharashtra Tenancy and Agricultural Land Act, 1948 (MTAL).

Section 63 of the MTAL earlier barred the transfer of agricultural lands to non-farmers without the permission of the collector or officer authorised by the state government. However, once amended, a sub-section was included which said that the bar for transfer of agricultural land shall not apply to land situated within the limits of a municipal corporation or is within the jurisdiction of the Special Planning Authority or New Town Development Authority constituted under the Maharashtra Regional and Town Planning Act, 1966 (MRTP) and land allocated to residential, commercial, industrial or any other non-Agricultural use in the draft of final Regional Plan or Town Planning Scheme.

Such transfers would not require the collector’s permission only when the agricultural land purchases by a non-farmer for industrial purposes or for building integrated townships. This may include land for construction of industrial buildings that would be further used for manufacturing, power projects, research and development, canteens, godowns, housing for workers of the concerned industry, co-operative industrial estate, cottage industry, gramudyogs or service industry.

Also Read: How To Convert Agricultural Land For Residential Use

The provisions under the amendment include-

Land should be put to use: Earlier, if the land purchased exceeded 10 hectare or approximately 25 acre, prior permission of the Development Commissioner of Industries was mandatory. However, this clause is now deleted. Now, the land needs to be put to industrial use within five years of purchase. Any amount of land in the agricultural zone can be purchased as long as the extant law allows it.

After the initial five years, an extension can be granted not exceeding another five years but after payment of non-utilisation charges at the rate of two per cent of the market value of the land per annum.

Repurchase: Earlier, the government would allow 15 years within which the buyers needed to start work on the newly purchased land. This cap has been brought down to 10 years now post which, if unused, the Collector can resume possession, offer for purchase to the original owner. The owner from whom the land was purchased can buy it back at the same price at which it was sold. If the original owner refuses to buy back, this land can be auctioned. In this case, the purchaser will be entitled to compensation equal to the price at which the land had been purchased by him/her.

Payments: An amount equal to two per cent of the purchase price should be paid to the Collector within a month of the execution of the sale deed if the land is purchased from an Occupant Class-II (those who are subject to restrictions on the right to transfer). The amount would be 50 per cent of the purchase price if the land is purchased for an integrated township project. If the buyer fails to pay within a month, then they will be liable to pay 75 per cent of the purchase price or the market value as per ready reckoner rate, whichever is higher.

Intimation about change in land-use: A buyer needs to inform the Collector about the date on which the change in land-use started within 30 days. If they fail, it would call for a penalty of up to 20 times the amount of non-agricultural assessment fees.

Sale of land: If the buyer so decides that they would want to sell the land before the 10-year period, then the Collector will allow them to do so after paying the non-utilisation charges and then the land sold should be used for non-agricultural purposes only. The seller will also need to submit 25 per cent of the market value of the land with the Collector.

Will you need to convert agricultural land?

Nagpur-based advocate, Abhilasha Wanmali says, “According to the amendment made, if the land is situated within the jurisdiction of a municipal corporation, municipal council or town planning authority then without taking permission from the Collector, you can buy it. You will need to convert it to non-agricultural land. If you have a background of the agriculturist and can show yourself as a farmer then it will be advantageous for you.”

Also Read: The pros and cons of buying agricultural land


The Karnataka Land Reforms Act, 1961, which initially restricted non-farmers to buy land was later amended in 1995, and allowed those with an annual income of less than Rs 2 lakh to buy. In 2015, another amendment allowed even those with an annual income of up to Rs 25 lakh to buy agricultural land after the conversion.

In order to buy agricultural land for non-agricultural purpose, you need to get the land converted as per rules laid out in the Karnataka Land Revenue Act 1966. The Deputy Commissioner, however, needs to be convinced and the permission rests on him. In case of violations, a penalty is applicable.

This was not the only amendment passed in 2015. It also empowered the Deputy Commissioner instead of the Assistant Commissioner to grant permission to non-agriculturists exercising utmost caution.

Note that now, double the area of land can be acquired for educational, housing-related, religious or horticulture purposes than before.

Reports say the state government may be in talks to do away with such an income ceiling altogether.

The next steps include submitting the Record of Rights and Tenancy Certificate (RTC) in original issued by the revenue authority along with a photocopy of the survey number. This needs to be duly attested by the Department of Survey Settlement and Land Records. Details regarding dimensions of land proposed for conversion also need to be stated along with the submission of the site plan.

There are charges for land conversion and this varies from place to place and district to district and applicable as per Rule 107 of the Karnataka Land Revenue Rules 1966. More so, post-conversion there are rules related to how the land should be treated, a stipulated period within which land cannot be sold etc. Land which has been converted for residential purposes cannot be used for industrial purposes.

Last Updated: Mon Apr 15 2019

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