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CategoriesLand Investment

Buying Land as an Individual, HUF, LLP or Private Limited Company

By Girish Chhalwani,

TL;DR

  • Section 45(5A), which defers the tax on a joint development gain to the year of the completion certificate, is available only to individuals and Hindu Undivided Families. Firms, LLPs and companies do not get it.
  • Section 54F, the reinvestment exemption used when land is sold and the proceeds go into a residential house, is likewise an individual and HUF provision.
  • The choice between 12.5 per cent without indexation and 20 per cent with indexation, for property acquired before 23 July 2024, is open only to a resident individual or HUF. Everyone else is on 12.5 per cent.
  • So the two biggest tax levers available to a land holder in Maharashtra both switch off the moment the land sits inside a company or an LLP.
  • What a company buys you is different: limited liability, easier admission of investors, cleaner succession of the holding, and the ability to run development as a business.
  • Getting land out of a company later is expensive. Assume the structure you choose at purchase is the structure you sell from.
  • Before any of this, check whether the buyer is even eligible to acquire the land. Agricultural land in Maharashtra carries its own restrictions on who may purchase, and no tax argument survives an ineligible buyer.

Girish Chhalwani, Founder & CEO, THE EDGE Developments · 20+ years in Maharashtra land acquisition, tenure and NA conversion · 8 min read · Last updated 13 September 2026

The holding entity is a tax decision disguised as an administrative one, and it is made before the deed rather than after it. The question of buying land through a company rather than personally is usually raised for reasons of convenience and answered on reflex. The reflex is often wrong, because the concessions that matter most to a land holder are written for individuals and HUFs only.

The two provisions that decide most of it

Start with what is lost rather than what is gained, because the losses are specific and quantifiable while the gains are usually described in generalities.

Availability of the key concessions by holding entity
Provision Individual HUF Partnership firm LLP Private limited company
Section 45(5A) JDA deferral to the completion certificate year Yes Yes No No No
Section 54F reinvestment exemption into a residential house Yes Yes No No No
Option of 20 per cent with indexation for property acquired before 23 July 2024 Yes, if resident Yes, if resident No No No

Section 45(5A) is the one that surprises people most. A landowner who signs a joint development agreement while holding personally pays tax in the year the completion certificate issues, when there is something realisable in hand. The same landowner holding through a company pays on ordinary principles in the year of the transfer to the developer, years before any return.

That is not a rate difference. It is a cash-flow event in the wrong year.

What each structure is actually for

Individual

The default, and for a long-hold land position usually the right one. Every concession above is available. The costs are that liability is personal, that admitting a co-investor means co-ownership with all its partition and consent problems, and that succession runs through the ordinary law of inheritance with the delays that brings.

Hindu Undivided Family

Retains the concessions and adds a separate assessable entity with its own exemption limit, which can be useful where family funds are genuinely being deployed. It is not a wrapper to be created for a transaction. The source of funds and the character of the property have to be right, and unwinding a HUF holding is harder than creating one. Partition is a real event with real consequences, not an administrative step.

Partnership firm

Rarely the right answer for a pure land hold. It loses the concessions, and introduces the instability of a firm whose constitution changes when partners come and go. Where it appears, it is usually a legacy structure rather than a chosen one.

LLP

Limited liability with a partnership’s internal flexibility, and popular for exactly that reason. The trade is the loss of the individual and HUF concessions. An LLP earns its place when the activity is genuinely a business with multiple participants and shared risk, not when a single family is holding a parcel for ten years.

Private limited company

The right structure when the land is inventory for a development business, when outside investors are coming in, or when the holding needs to be transferable as shares rather than as land. It is the wrong structure for a family that intends to hold and eventually sell, because every rupee of gain is taxed inside the company and taxed again on the way out to the shareholders.

The exit problem nobody models at purchase

Land is easy to put into a company and expensive to take out of one. The route out is a transfer from the company to the shareholder or a third party, which is a transfer for tax purposes and an instrument for stamp duty purposes, on top of whatever has already been paid inside the company on the gain.

Selling the shares instead of the land avoids a second conveyance, and is the standard answer, but it brings its own set of buyer concerns: the purchaser inherits the company’s entire history, including liabilities that have nothing to do with the land. Sophisticated buyers price that risk. Unsophisticated ones refuse the structure entirely, which narrows the market for your asset.

Section 45(5A) only applies to Individuals and HUF.

Quicko, on the scope of the joint development deferral

The question that precedes all of this

None of the above matters if the proposed buyer cannot lawfully acquire the land. Agricultural land in Maharashtra carries restrictions on who may purchase it, and those restrictions attach to the character of the buyer. A company or an LLP proposing to buy agricultural land is in a materially different position from an individual agriculturist, and the answer is not uniform across situations.

Treat eligibility as the first question and tax as the second. A structure that is tax-optimal and ineligible to buy is not a structure, and a transfer made in the face of a restriction creates precisely the kind of defect the rest of this site is about.

A working decision sequence

  1. Is the buyer eligible to acquire this land at all? Tenure and buyer-character restrictions come first.
  2. What is the realistic exit? A sale in eight years, a joint development, a development you will run yourself, or a hold across a generation. Each points to a different answer.
  3. If a joint development is plausible, hold personally or in the HUF. Section 45(5A) is worth more than most of the reasons people give for incorporating.
  4. If a sale followed by reinvestment into a house is plausible, hold personally or in the HUF. Section 54F is not available otherwise.
  5. If outside money is coming in, or the land is inventory, use the company. That is what it is for, and the concessions you are giving up were never going to apply to a trading position anyway.
  6. Do not incorporate for liability reasons alone on a passive land hold. The liability profile of holding a parcel is not the liability profile of running a development.
  7. Do not restructure just before a transaction. Moving land into an entity shortly before a JDA or a sale is both a taxable event in itself and a poor look.

Frequently asked questions

Should I buy land in my own name or through a company

For a passive hold with a likely sale or joint development, personal or HUF holding preserves sections 45(5A) and 54F, which a company cannot use. For a development business or where investors are coming in, a company is the appropriate structure.

Can a company claim section 45(5A) on a joint development

No. The deferral to the completion certificate year is available only to individuals and Hindu Undivided Families.

Can an LLP claim section 54F

No. Section 54F is an individual and HUF provision.

Who can choose 20 per cent with indexation

A resident individual or HUF holding property acquired before 23 July 2024. Other taxpayers are on 12.5 per cent without indexation.

Is it expensive to move land out of a company later

Yes. The transfer is a taxable event and an instrument attracting stamp duty, on top of tax already borne inside the company on the gain. Selling the shares avoids a second conveyance but transfers the company history to the buyer.

Does the entity change the stamp duty on purchase

Stamp duty is charged on the instrument rather than on the identity of the buyer, with concessions that turn on the buyer only in specific cases such as the concession available to women purchasers. Compute it for your specific instrument rather than assuming.

Can a company buy agricultural land in Maharashtra

Restrictions apply to who may purchase agricultural land, and they attach to the character of the buyer. Confirm eligibility for the specific parcel and the specific buyer before choosing a structure.

Deciding whose name goes on the deed? Decide the exit first. The structure follows from it, and reversing the choice later is the expensive part.

Talk to THE EDGE

Related reading

Citations and sources

This article is general information, not tax or corporate advice on any particular holding. Take the structure decision with a chartered accountant and an advocate before the deed is drawn.

Aerial view of green agricultural fields at golden hour with a farmhouse in rural Maharashtra
CategoriesLand Investment Market Insights Mumbai 3.0 NRI Guides tips & tricks Uncategorized Weekend Homes

Who Can Buy Agricultural Land in Maharashtra? Eligibility, the Non-Agriculturist Rule, and Section 63

By Girish Chhalwani,

TL;DR / Key Takeaways

  • The default rule: under Section 63 of the Maharashtra Tenancy and Agricultural Lands Act, 1948, agricultural land cannot be sold, gifted, exchanged or leased to a non-agriculturist without the prior permission of the Collector.
  • Who is an agriculturist: Section 2 defines it as a person who cultivates land personally. If you already own and till farmland, you generally qualify; a salaried professional with no farm holding usually does not.
  • The industrial exception: Section 63-1A lets a non-agriculturist buy agricultural land for bona fide industrial use or an integrated township, subject to putting it to use within a fixed period.
  • The 2016 change: Maharashtra Act No. 1 of 2016 (w.e.f. 1 January 2016) lifted the Section 63 bar for land inside municipal or planning-authority limits that is earmarked for non-agricultural use in the plan.
  • Holding cap: after a transfer, an agriculturist buyer should not end up holding more than two-thirds of the ceiling area fixed under the Maharashtra Agricultural Lands (Ceiling on Holdings) Act, 1961.
  • Buying is only step one: even a valid purchase does not convert farmland into buildable land. NA conversion under the Maharashtra Land Revenue Code is a separate process.

By Girish Chhalwani, Founder & CEO, THE EDGE Developments · 20+ years in Maharashtra land acquisition and NA conversion · Reading time: about 7 minutes · Last updated: 21 August 2026

Who can buy agricultural land in Maharashtra?

Direct answer: in Maharashtra, only an “agriculturist” can freely buy agricultural land. Under Section 63 of the Maharashtra Tenancy and Agricultural Lands Act, 1948, a non-agriculturist cannot purchase farmland without the prior written permission of the Collector. This single rule is the reason so many first-time buyers are turned away at the sub-registrar’s office, and it is the first thing our team at THE EDGE Developments checks on any farmland deal.

The logic behind the bar is land reform, not obstruction. The Act was written to keep agricultural land in the hands of people who actually cultivate it and to stop farmland being bought up purely for speculation. That policy still governs every farmland sale deed registered in the state today.

What Section 63 actually says

Section 63 bars any “sale (including sale in execution of a decree of a Civil Court or for recovery of arrears of land revenue), gift, exchange or lease of any land or interest therein” in favour of a person who is not an agriculturist, unless the Collector or an officer authorised by the State Government grants permission. The permission can carry conditions.

Two numeric limits sit inside the section and are easy to miss:

  • The income reference: the section restricts transfers where the proposed buyer’s annual income from sources other than agriculture is Rs. 12,000 or more. This is old statutory text; treat it as a section-level condition to check with your advocate rather than a modern affordability test.
  • The two-thirds ceiling: a transfer should not leave the buyer holding land exceeding two-thirds of the ceiling area determined under the Maharashtra Agricultural Lands (Ceiling on Holdings) Act, 1961.

Who counts as an “agriculturist”?

An agriculturist is a person who cultivates land personally. Section 2 of the Act defines the term this way, and the companion definition of “to cultivate personally” (drawn from the ceiling law) covers cultivation on your own account, including through family members, hired labour or servants on wages, under your own personal supervision. Sharecropping arrangements are treated differently.

Two practical clarifications matter for buyers:

  • An agriculturist from another state is not automatically an agriculturist here. Courts have treated, for example, a Punjab farmer buying Maharashtra farmland as needing to satisfy the Section 63 route, because the record that proves cultivation status is the Maharashtra 7/12 extract. Do not assume a farm background elsewhere is enough.
  • A person rendered landless by public acquisition is deemed an agriculturist for a period not exceeding ten years from the date possession is taken, so they can buy replacement farmland within that window.

Eligibility at a glance: who can buy, and how

Use this table as a first filter. It is a starting point for due diligence, not a substitute for a title-and-status opinion from a Maharashtra advocate.

Buyer type Can buy agricultural land? Route / permission
Maharashtra agriculturist (owns and cultivates farmland here) Yes, directly Normal sale deed; holding must stay within the two-thirds ceiling
Agricultural labourer Yes Direct purchase, subject to the ceiling limit
Person rendered landless by public acquisition Yes, for up to 10 years Deemed an agriculturist under Section 63 during that window
Agriculturist from another state Not automatically Treated as a non-agriculturist for Maharashtra land; needs Collector permission under Section 63
Non-agriculturist (salaried, professional, business, NRI) Not directly Prior Collector permission under Section 63, on prescribed conditions
Non-agriculturist buying for industry or an integrated township Yes Section 63-1A route; land must be put to bona fide use within the fixed period
Any buyer, land inside municipal / planning-authority limits earmarked for NA use Yes, bar lifted Section 63 exemption added by Maharashtra Act No. 1 of 2016

The Section 63-1A industrial route

Section 63-1A is the main door through which a non-agriculturist lawfully acquires agricultural land: bona fide industrial use or an integrated/special township project. The provision was first introduced in 1994 and has been amended since. Its core bargain is simple: you may buy farmland without being an agriculturist, but you must actually put it to the declared industrial or township use, not sit on it.

Under the position after the 2016 amendment, the land must be put to bona fide industrial use within five years of purchase. If it is not, the Collector may extend the period by a further five years on payment of a non-utilisation charge (reported at 2% of market value per year), failing which the land can be resumed. This is a genuine compliance obligation, not a formality, so factor the timeline into any project plan.

The 2016 amendment: where the bar no longer applies

Maharashtra Act No. 1 of 2016, effective 1 January 2016, is enacted law, not a proposal. It amended Section 63 so the non-agriculturist bar does not apply to land that is situated within the limits of a Municipal Corporation or Municipal Council, or within the jurisdiction of a Special Planning Authority or New Town Development Authority under the Maharashtra Regional and Town Planning Act, 1966, and which is allocated to residential, commercial, industrial or other non-agricultural use in the draft or final Regional Plan or Town Planning Scheme.

In plain terms: if the land already sits inside a planned urban footprint and the plan zones it for non-agricultural use, a non-agriculturist can generally buy it. This is why farmland on the fringe of a growing town can change hands more easily than identical-looking land deep in an agricultural zone. Always confirm the zoning against the sanctioned plan before relying on this exemption.

The Collector-permission route for non-agriculturists

Where none of the exemptions apply, a non-agriculturist can still buy farmland by obtaining prior permission from the Collector (or an authorised officer) under Section 63. The application is decided on prescribed conditions and is discretionary, so treat approval as something to be earned, not assumed.

A recurring trap is the “ex-post-facto” permission, where parties register first and seek sanction later. This is legally fragile and has been litigated. The safe sequence is permission first, deed second. If a seller pushes you to register before the Collector’s order is in hand, walk that back.

Buying the land does not make it buildable

Clearing Section 63 gets you lawful ownership of agricultural land. It does not let you build. To use the land for housing, plotting or commercial development, you still need non-agricultural (NA) conversion under the Maharashtra Land Revenue Code, which is a separate approval with its own one-time premium and conditions. Eligibility to buy and permission to build are two different gates, and both must be cleared.

This is also why tenure matters. If the land is restricted-tenure or granted land, resale carries its own sanction rules on top of Section 63 — see our guide on reselling Class-II, MIDC or granted land in Maharashtra. And before any farmland purchase, run the red flags to check before you buy a plot in MMR and budget for the stamp duty and registration charges on land in Maharashtra.

“The mistake we see most often is a buyer falling in love with a survey number before checking whether they are even eligible to hold it. In Maharashtra, agriculturist status is the first question on farmland, not the last. Confirm the status, confirm the route — Section 63, 63-1A or the planning-zone exemption — and only then talk price.”

— Girish Chhalwani, Founder & CEO, THE EDGE Developments

Frequently asked questions

Can a non-agriculturist buy agricultural land in Maharashtra

Not directly. Section 63 of the Maharashtra Tenancy and Agricultural Lands Act, 1948 bars the sale of farmland to a non-agriculturist without prior Collector permission. A non-agriculturist can still acquire it through the Section 63-1A industrial or township route, through Collector permission, or where the land falls under the 2016 planning-zone exemption.

Who qualifies as an agriculturist under the Tenancy Act

Section 2 defines an agriculturist as a person who cultivates land personally, on their own account, whether by their own labour, family members or hired workers under their supervision. A person rendered landless by public acquisition is deemed an agriculturist for up to ten years. A farm background in another state is not automatically sufficient in Maharashtra.

What does Section 63-1A allow

Section 63-1A allows a non-agriculturist to purchase agricultural land for bona fide industrial use or an integrated or special township project, despite the Section 63 bar. The buyer must put the land to the declared use within the prescribed period, and non-utilisation can attract charges or resumption of the land by the Collector.

How much agricultural land can one person hold

After a transfer under Section 63, the buyer should not end up holding land exceeding two-thirds of the ceiling area fixed under the Maharashtra Agricultural Lands (Ceiling on Holdings) Act, 1961. The exact ceiling depends on land class and irrigation, so verify the applicable figure for the specific parcel before you buy.

Do I still need NA conversion after buying agricultural land

Yes. Clearing the Section 63 eligibility rule only gives you lawful ownership of agricultural land. To build or develop, you separately need non-agricultural conversion under the Maharashtra Land Revenue Code, which carries its own one-time premium and conditions. Eligibility to buy and permission to build are two distinct approvals.

Disclaimer: This article is general information on Maharashtra land law as of August 2026, not legal advice. Statutory positions, ceiling figures and permission conditions change and vary by parcel, tenure and zone. Verify the current position and obtain a title-and-status opinion from a qualified Maharashtra advocate before acting.

Thinking of buying farmland in Maharashtra?

Before you sign anything, let THE EDGE Developments confirm your eligibility, the correct Section 63 route and the NA path for your parcel. We do the diligence first, so you buy with certainty.

Talk to our land team »  |  Call +91-9664662938  |  connect@theedgedevelopments.com

Related reading

Citations & sources

  • Section 63, The Maharashtra Tenancy and Agricultural Lands Act, 1948 — transfer to non-agriculturists, income reference and two-thirds ceiling text (Indian Kanoon): indiankanoon.org/doc/103576036
  • Section 2 (definitions), The Maharashtra Tenancy and Agricultural Lands Act, 1948 — “agriculturist” and “to cultivate personally” (Indian Kanoon): indiankanoon.org/doc/16041184
  • Section 2, The Maharashtra Agricultural Lands (Ceiling on Holdings) Act, 1961 — ceiling area and personal cultivation (Indian Kanoon): indiankanoon.org/doc/83863609
  • Cyril Amarchand Mangaldas — 2016 amendments to Section 63-1A, Maharashtra (India Corporate Law): corporate.cyrilamarchandblogs.com
  • Transfer of land under Sections 43 and 63, Bombay/Maharashtra Tenancy and Agricultural Lands Act, 1948 (iPleaders): blog.ipleaders.in

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