Published on and written by Cyril Jarnias
Buying an apartment in the city, investing in an office, converting agricultural land into a housing development, renting a property, or passing on an asset to heirs: in India, every stage of a real estate asset’s life is governed by a tight web of national laws, state rules, and fiscal and environmental regulations. Understanding these rules is no longer just a matter for lawyers and developers: for any buyer, seller, foreign investor, or simple tenant, it has become a condition for legal survival.
This article presents the main legal frameworks governing the Indian real estate sector. It covers land conversion, environmental clearances, taxation (including GST), inheritance rules, dispute prevention, the RERA law, specifics for foreigners, rental rights, as well as stamp duty and registration fees. The goal is to provide a practical and accessible overview, based on official texts, for a non-specialist audience.
1. Land Status and Conversion
In India, any serious real estate consideration begins with a seemingly simple question: what type of land is it? Because the land’s status determines your right to build, sell, or buy.
By default, territory is classified as agricultural land, reflecting an economy long dominated by agriculture. Agricultural land is intended for cultivation, livestock, or forestry. As long as it is not legally “converted,” building anything other than agricultural infrastructure on it is prohibited.
Building a house, an apartment building, or a warehouse on agricultural land without prior conversion is illegal. Authorities can order demolition, impose substantial fines, and initiate legal proceedings. Conversely, once conversion is granted, the owner receives an official conversion certificate that changes the land’s legal status. The land revenue records are then updated through a mutation operation to reflect the property’s new non-agricultural nature.
1.1. A State Competency: Rules That Vary Significantly
Land being a subject under the jurisdiction of States, the laws and procedures for conversion differ across territories. In some states, a revenue administration or a District Collector oversees conversion; in others, urban planning authorities or regional development corporations play a central role.
The table presented below serves as a concrete example to highlight the diversity mentioned in the article’s content. It allows for visualizing and comparing the different categories or elements discussed.
| State / Territory | Main Law or Code | Primary Conversion Authority |
|---|---|---|
| Delhi | Delhi Land Reforms Act | Delhi Development Authority (DDA) |
| Maharashtra | Maharashtra Land Revenue Code | District Collector |
| Bihar | Bihar Agriculture Land (Conversion…) Act, 2010 | Sub‑Divisional Officer |
| Assam | Assam Agricultural Land (Reclassification…) Act, 2015 | Revenue Administration (based on area) |
| Karnataka | Land Revenue Department | Revenue Commissioner |
| Rajasthan | Various Land Texts | Tehsildar / SDO / Collector (based on area) |
| Gujarat | Gujarat Tenancy and Agricultural Land Act, 1948 | Competent Land Administration |
The internal distribution of competencies is sometimes itself a function of the land’s size. In Rajasthan, for example, the Tehsildar handles applications up to 2,000 m², the Sub‑Divisional Officer up to 4,000 m², and beyond that, it is the Collector who decides.
1.2. Who Can Buy Agricultural Land?
A key point overlooked by many non-resident investors: Indian law prohibits a Non‑Resident Indian (NRI) from buying agricultural land, plantations, or farmhouses. The only exception: inheriting or receiving such a property by gift, subject to additional rules.
Even among residents, access to agricultural land depends on the State. Karnataka, for example, legally reserves the purchase of agricultural land for registered farmers or members of farming families, whereas in Telangana, any individual, regardless of profession, can acquire an agricultural plot.
Once the land is converted to residential or commercial use, however, NRIs can, under the FEMA (Foreign Exchange Management Act) regime, purchase such property like any resident.
1.3. Procedure and Documents for Conversion
The conversion procedure follows a general pattern, even though the forms and portals change from one State to another. It includes:
To obtain a change in zoning, one must follow a strict administrative procedure. This includes: filing a formal application with the competent authority, paying administrative and conversion fees (non-refundable), a site inspection, verification of the project’s compatibility with the master plan and current zoning regulations, ultimately leading to a decision to approve or reject the application.
The documents commonly required are numerous: proof of ownership (sale deed, patta, title deed), identity proof of the owner(s), cadastral sketch with precise boundaries, plan of intended use, NOC (No Objection Certificate) from the Panchayat or municipality, land rights records (RTC, 7/12 extract in Maharashtra), nil-encumbrance certificate, previous mutation certificates, and for large projects, an Environmental Impact Assessment (EIA) report with a compliance certificate. In case of inheritance or family partition, a partition deed may be requested.
Timelines vary significantly: a range of 30 to 90 days is often cited, but in states where procedures remain largely manual, it is not uncommon for the process to take three to six months. Conversely, where online portals have been set up, one month may suffice.
Finally, conversion is not eternal: if the owner does not use the land in accordance with the approved use within a specified period (for example, one year), the permission can be revoked.
1.4. Cost of Conversion: Spectacular Variations
Conversion fees are calculated based on area, location, market value, and future use (residential, commercial, industrial). They can take the form of a percentage of the land’s value or a premium indexed to official values (Jantri, Collector rate, Ready Reckoner, etc.).
The following table shows the extent of variations between several states.
| State | Announced Calculation Basis | Examples of Rates or Charges |
|---|---|---|
| Tamil Nadu | Market Value | Scrutiny fees ≈ ₹1000/plot; commercial conversion from 3% |
| Andhra Pradesh | Base Value | One Time Conversion Tax: 2% in major cities, 3% elsewhere |
| Bihar | Property Market Value | Conversion fees: 10% of the value |
| Maharashtra | Ready Reckoner (official value) | Up to 50% of the total land cost |
| Delhi | Per m² rates | From ₹14,328 to ₹24,777 per m² |
| Gujarat | Jantri (cadastral value) | Premium of 40% of the Jantri value |
Failing to declare the conversion within the prescribed deadlines exposes one to additional penalties. In some states, failure to declare within 90 days can result in heavy fines.
1.5. Zoning, Environment, and Risks
The conversion decision is not limited to the land’s legal situation alone. Authorities examine the zoning (residential, commercial, industrial, green zone, etc.) defined in the urban development plan. They take into account proximity to protected areas (lakes, rivers, forests, wetlands, reserves), where conversion may be strictly regulated or even prohibited.
Large projects, especially those near ecologically sensitive zones, require specific environmental clearances, with an impact study. Owners who use their land for purposes other than those specified in the conversion certificate face sanctions. In Bihar, for example, illegal use of converted land can result in a fine equivalent to 50% of the conversion cost, or even the auctioning of the property.
2. Environmental Clearances and Construction
The country’s rapid urbanization, combined with sustained growth in the real estate sector, has pushed legislators to regulate the environmental impact of projects much more strictly. The Environment Protection Act forms the legal basis for this framework; it requires, for many industrial or construction activities, prior obtaining of an Environmental Clearance (EC).
2.1. Who Decides? MoEFCC, SEIAA, SEAC…
Overall steering of the environmental control system falls to the Ministry of Environment, Forest and Climate Change (MoEFCC). This national body supervises the EIA (Environmental Impact Assessment) process, coordinates the Expert Appraisal Committees (EAC) at the central level and the State Expert Appraisal Committees (SEAC) in each state. The final decision-making authority, for Category B projects, is the State Environment Impact Assessment Authority (SEIAA). The State Pollution Control Boards (SPCB) play a role in organizing public consultations and monitoring.
2.2. Project Categorization and Thresholds
Projects are classified into two main categories based on the scale of their potential impact:
Projects subject to environmental assessment in India are classified into two categories. Category A concerns major projects (large-capacity power plants, ports, mines, etc.) which fall directly under the ministry (MoEFCC) after review by an expert committee (EAC). Category B groups projects with more localized impact, which are processed by the authorities (SEIAA) and committees (SEAC) at the state level.
Category B projects are subdivided into B1 (full EIA mandatory) and B2 (without EIA). A Category B project located within 10 km of a protected area (national park, critical zone, international border, critically polluted area) may be reclassified as Category A.
Regulatory framework and procedures applicable to real estate and development projects, based on a 2006 notification.
A 2006 notification clearly integrated construction and development projects into the environmental impact assessment system.
The threshold generally used to require a full environmental impact study (EC) is a built-up area of 20,000 m².
Most real estate projects fall under Category B. They are processed based on standard forms (Form 1, Form 1A) and a conceptual plan.
For Category B projects, processing generally does not require going through a comprehensive impact study or a public hearing.
2.3. Environmental Clearance Process
The standard process involves four main stages: screening, scoping, public consultation, then appraisal. For the majority of construction projects in Category B, the process is adapted: the public consultation is often omitted and the appraisal focuses on the technical forms and the conceptual plan.
Concretely, the developer:
– submits a complete dossier online on the national platform
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
