Introduction to how to buy agricultural land in Karnataka: Agriculture is one of the ancient, basic occupations of Karnataka. It is an important source of livelihood for many people in Karnataka. Economic growth depends on agriculture. It provides food to people and raw materials to industries.
Agriculture occupies approximately 12.31 million hectares of land in Karnataka. Methods of buying agricultural land vary from state to state. In this article we also covered the below topics about agricultural land in Karnataka;
- The benefits of buying agricultural land in Karnataka
- Can a normal person buy agricultural land in Karnataka?
- Is it good to invest in agricultural land in Karnataka?
- Tips for buying agricultural land
- Important tips for buying agricultural land
- Best place for agriculture in Karnataka
- Necessary documents for agricultural land registration in Karnataka
A step-by-step guide of how to buy agricultural land in Karnataka, agriculture loans, and documents for buying agricultural land
Agricultural land is land that is commonly used for farming or farming purposes. For many, buying a piece of land is the first step in building a home. Therefore, to avoid getting into legal disputes, it is important to verify that the land has a clear and salable title. Some important crops grown in Karnataka includes Rice, Maize, Pulses, and Oilseeds. Sugarcane, Cashew, Cardamom, and Chillies are also widely grown in the state. In India, Karnataka is the largest producer of coarse grains, coffee, and silk.
Importance of Agriculture in Karnataka;
- It provides food to the people.
- It employs people.
- It provides raw materials to industries.
- It plays an important role in the political and social system of Karnataka.
- It helps in the development of professional occupations such as transport, banking, etc.
For the longest time, Karnataka has seen little movement in the agricultural land market, with ancient land boundary laws a major factor. But over the past six months, transactions have increased, resulting in an increase in revenue for the government. Land is a major factor in access to resources in rural areas. Theoretically, access to resources determines the severity and extent of poverty. In addition, access to land also contributes to the process of backwardness. Land is a limited resource and its demand for diverse purposes is increasing day by day. Large areas of usable but barren land resources. Moreover, the pressure of commercialization is increasingly forcing productive land resources to be used for non-agricultural purposes.
Given the importance of land use and policy, the Karnataka government has recently released a document on land use policy. In general, agricultural land is considered a good investment for high-value people and high-income people. Whatever your reason for buying agricultural land, owning agricultural land can be a lucrative investment for many people. However, before you rush to start looking for your property, it is important to know whether the investment is prudent and well thought out.
Some points to consider when buying agricultural land
The following are some points to consider when buying agricultural land in India.
- The title deed of the land plot confirms the name of the seller and also confirms whether the seller has full right to sell the property. The actual current practice and past practices should be examined by a lawyer to confirm that the seller has not allowed access to others through this land. If the land is owned by more than one person, a certificate of release must be obtained from the other participants before the documents can be registered.
- Agreement for sale – After all the documents have been verified, a written agreement is made about the cost, advance payment, and the actual sale time. The agreement must be prepared by a lawyer and signed by the parties and two witnesses. It is mentioned here that the contract to sell the document is a prelude to the sale deed. Based on the terms and conditions established in this document, future agreements are likely to proceed. As a result, before signing a sales contract, it is very important to carefully set the terms and carefully understand each clause to fully understand its implications.
- Stamp duty on land – Stamp duty is a government tax and varies from state to state. The stamp duty paid will be considered a legal document and can be submitted to the court as evidence.
- Registration of the land – Land registration is the process by which a copy of a document is recorded and the title to the immovable property is transferred to the registrar’s office in the name of the buyer. A document signed by both parties is recorded in the Registrar’s Office, stating the transfer of the property to the buyer within 4 months from the date of execution of the document. At the time of registration, house tax receipts, an original title deed, and previous actions are required in the presence of two witnesses.
- Conveyance deed of sale deed of the land – A land deed or sale deed is a document that transfers the title of the property from the seller to the buyer. This document will help you determine the ownership of the property, where the property is located, and details such as site measurements, boundary details, etc.
- Tax Receipts and Bills – The buyer should check the latest property tax bills and ask about them at the municipal offices. The buyer must also ensure that notices or requests for the property are not pending. Water, electricity are other bills, should be updated.
- Land Measurement – An accredited surveyor can ensure that the measurement of the plot and its boundaries is accurate and as indicated in the title certificate.
- Encumbrance Certificate – This can be obtained from the sub-registrar office. It is valid proof that indicates that the land has no legal obligations.
- NOC from Tehsildar
- Akarband issued by Survey department
- Saguvali chit/ certification of grant
As amendments have been made to the purchase of agricultural land in Karnataka, the Karnataka government has allowed many non-farmers to buy agricultural land in the state of Karnataka and engage in agricultural activities.
Agricultural land policy in Karnataka
Land Holding – It is interesting to note that the number of small and marginal holdings, as well as their share in the total operated area, has been increasing over the years. The increase in small and marginal holdings and the operated area became more pronounced. Small and backward farmers (operating <2 hectares) make up 76% of the holdings and work in Karnataka for about 37%. The average size of the area of operation of all land-sized classes is declining. This indicates the growing fragmentation of land in the state.
The existing act needs to be amended to allow such use of land for agriculture without any restrictions. The technical aspects of leasing arrangements that can benefit both landowners and tenants are as follows;
- Legalize land leases.
- The investor will not convert the land for other purposes.
- The farmer will own the land.
- No damage will be done to the land.
- Investors should start agriculture and allied activities
- Agribusiness activities will be under the Integrated Agribusiness Development Policy, 2011 prepared by the Government of Karnataka.
- Remove the negative possession clause from state laws.
- Provide tenants with access to short-term credit and crop insurance based on a simple lease agreement.
The cost of agricultural land in Karnataka
In case if you miss this: Soil Preparation Methods In Agriculture.
The cost of one acre of agricultural land in Karnataka depends on the type of land and its fertility. The different types of land are given below;
- Soil (red soil / black soil)
- Water (naturally available or borewell)
- Arable or plain land
- Types of crops grown on this land.
Land prices vary in Karnataka. In Karnataka in particular, the value of 1 acre of land is determined by various factors such as its location, fertility, topography, etc. Approximately, 1 acre of agricultural land in Karnataka is worth Rs. Rs 30-40 lakh. However, land prices may vary in some parts of the state.
Out of 98.95 hectares of arable land in Karnataka, 2.2 million hectares of agricultural land is uncultivated as most of the landowners have migrated from barren lands to cities that are available to buyers at low prices.
Note: Agriculture land prices depend on many factors like location, accessibility, market demand, and they may change from time to time.
Advantages and disadvantages of buying agricultural land in Karnataka
Many urban investors are investing in agricultural land due to the reduction in urban reality and the promise of long-term profits.
The benefits of investing in agricultural land can be given below;
- A plot of agricultural land can guarantee long-term returns if it is in an area where the government has planned some infrastructure projects shortly.
- Moreover, in the case of acquisition by the government, the compensation is higher for rural lands than for urban lands. Several state governments are planning a land polling policy for areas where the city is expanding. If you become an owner under the land pooling policy, you will be guaranteed a regular return from the polls.
- As is true of all land developments, your assets do not diminish over time – something that cannot be said about the property such as flats, apartments, etc. The quality of the building structure deteriorates over time and the owner has to spend a lot. The amount of money, to maintain it. Investing in agricultural land not only saves you from spending all that money but also gives you the option to use the land for various purposes in the future, within the limits of the law.
- A piece of agricultural land guarantees some profit in the long run if it is in a particular place where the central or state government has announced some kind of infrastructure project which will be completed soon shortly.
- Since this is true for all kinds of land developments, the asset you buy will never diminish over time. However, this is not entirely true in the case of apartments, flats, etc. The quality and overall structure of the building deteriorates over time and in such cases, the owner has to spend a lot of money to maintain it.
- Investing in good quality and fertile agricultural land in a good location not only prevents you from incurring all the maintenance costs but also gives you the option to use this particular piece of land for many purposes later in the future following the legal limitations.
- Tax Benefits – The tax credit is a definite benefit in becoming a proud owner of a few acres of agricultural land. Income from land cannot be subject to wealth tax, a type of tax that is sometimes applied to income from real estate.
- Be self-sufficient – If you own your agricultural land, there is nothing to stop you from growing your crops. You can also apply for government benefits to do so. You can also raise your livestock, another possible source of food, as well as a reliable source of income.
- Rent your land – If you have enough space on your land, you may consider renting out the land to other farmers to get a share of your profits, which is a very small way to increase your income.
Disadvantages of buying agricultural land: Not everyone can buy – By law, you must be a farmer to own agricultural land in India. Although most states have such an order, some have eased the requirement. You can also get such land as a gift or by inheritance.
Conversion is not easy – Conversion is not possible for a fertile piece of agricultural land into residential land. The land must be dry land for a change.
Land Selling Act – Many states restrict land ownership. So, check out how much can be purchased in this condition.
Not everyone can buy – NRIs, for example, cannot buy agricultural/farmland in India.
How to invest your agricultural land in a profitable investment?
You can use the following methods to turn your land investment into a profitable business;
- Depending on the location, you can rent it out for community gardening.
- Start blogging about your latest farming adventures.
- Establish a bee farm and turn it into a tourist activity.
- If the land is fertile, grow unique flowers to sell in the local market.
- Sell plant seeds online.
- Grow herbs and sell them online.
- Offer tours or classes on farming.
- Use the agricultural land to generate solar energy.
Documents required for registration of agricultural lands in Karnataka
You must register your property under the land record of Karnataka. So, you stay away from legal troubles. In addition, when you sell your property, you must prove that you are the real owner of that particular land parcel and that a potential buyer will check your land records before buying the property.
List of documents required for registration;
- Encumbrance Certificate
- Original document signed by all parties.
- Invoice / DD Full Stamp Duty, Proof of Payment of Transfer Duty
- Registration Fee and User Charges
- Property Card
- Proof of identity of both seller and buyer and witness also
- PAN card
- Power of attorney
- Tax receipts
- Power of attorney copy (if the seller is using POA to sell the land)
- Aadhar card
- Address proof and original Id proof to display before the registrar.
Note: It is advised to seek a civil lawyer/advocate help to get the documents verified to establish a land title.
Mistakes to avoid when buying agricultural land
- It is important to make sure that one considers the importance of the land titles. Check the title of the farm before buying it. It helps to avoid legal complications and it helps to get the land faster.
- Buyers should be aware of agricultural land laws, especially if they are from another state. Agricultural lands fall under the jurisdiction of the state and the rules vary from state to state. It is important to review existing laws before buying agricultural land.
- Buyers should also make sure to physically verify the property and look at the details. Buyers must know the quality of the soil and other such features and this is important for agricultural land.
Agricultural land use and crop acreage trends in Karnataka
- Kolar, Mysore, Shimoga, Tumkur, Chitradurga, and Chickmagalur districts account for 65% of permanent pasture lands. In all these districts, the land under permanent pastures shows a continuous decline in three phases. Though, this reduction in area under permanent pastures is more than 3.5% of the total geographical area (TGA) of Karnataka.
- In Belgaum, Bijapur, Dharwad, Gadag, Mysore, and Hassan districts, the area under cultivation more than once shows increasing trends during the liberalization phase while Chickmagalur shows declining trends during the same period. Other districts show unequal trends.
- Bidar, Gulbarga, Bijapur, Belgaum, Dharwad, Bellary, and Raichur are the North Karnataka districts that showed increasing trends in the Jowar area during the post-green revolution period.
- Gulbarga shares a large portion of the land allotted to pulses in Karnataka. While Bidar shows a gradual and steady increase in the area allotted to pulses during the post-Green Revolution and post-liberalization phases, Gulbarga shows a tremendous increase during the liberalization phase. Dharwad, Bellary, Belgaum, Bijapur, and Raichur show a declining trend. In the age of liberalization, most of these districts show an inconsistent pattern.
- The area under oilseeds such as groundnut and sunflowers reflect the growing and unstable trends at the state level. Tumkur, Chitradurga, Dharwad, Kolar, Raichur, and Gulbarga districts have seen an increase in groundnut area in the post-Green Revolution period but have seen a steady decline in the period of liberalization. In Karnataka, the major sunflower growing districts are Bijapur, Bellary, Gulbarga, and Raichur. Dharwad and Chitradurga districts have seen an increase in sunflower areas since the Green Revolution.
- The major cotton growing districts of Karnataka are Dharwad, Bijapur, Haveri, Belgaum, Bellary, Gulbarga, Raichur, and Mysore.
Guidelines for buying agricultural land in Karnataka
How about this: How To Start Tomato Farming In Karnataka.
There are some guidelines for buying agricultural land in Karnataka.
Guidelines before 2015 for Buying Agricultural Land in Karnataka
Before 2015, only one farmer belonged to an agricultural family in Karnataka, and owned agricultural land in Karnataka could only buy agricultural land in Karnataka.
According to the definition, if a person’s annual income from the non-agricultural activity exceeds Rs 200,000 per annum, he will be classified as non-agricultural. Therefore, a non-agricultural person cannot buy any agricultural land in Karnataka.
Under Section 109 of the Karnataka Land Revenue Act, 1961, post-2015 guidelines
For non-agriculturists, the limit of Rs. 2 lakh per annum income increased to Rs. 25 lakhs per annum. They can buy agricultural land with the approval of the government and approach the Deputy Commissioner for the same.
According to the amended law, some of the conditions for a new farmer are;
- You must start farming within 1 year from the date of purchase.
- Also, if you stop agricultural activity within 5 years from the date of your purchase. In that case, the Karnataka government may confiscate your land.
How to qualify loan for purchase agricultural land
Starting a farm with agricultural land financing and running a farm is not cheap. Whether it’s buying new land or buying new equipment, the costs can be very high. That is why many people turn to agricultural loans. Agricultural loans provide the ability to buy new farms or expand existing ones.
Farmers can use agricultural loans for;
Purchase farmland – If you are starting as a farmer or growing an existing farm business, agricultural land loans can help you buy the land you need to build a great farm.
Cover operating costs – In addition to the need for agricultural land financing, many farmers also need help to cover some of the operating costs. Farm equipment is expensive but necessary to run the farm. With better equipment, you can cover more land faster.
Help them market their products – If they want to make a profit, farmers need to sell their produce. They need an effective marketing plan.
Agricultural land loan applying from a major bank – Farmers need financial assistance, most people turn to their local banks first. It is often easier to get a loan from the bank with which you usually do business. If you have good credit, you should be able to get a cheaper interest rate on your loan.
Loan for purchase of agricultural land in Karnataka
Where can you get a loan for agricultural land?
If the land you are buying is within municipal limits, banks can give you a loan to buy it. If the land is agricultural and within municipal limits, some banks include restrictive clauses that need the buyer to start construction on the land within six months to a year. Agricultural land is not permitted to be used for non-agricultural purposes unless the land is converted into first residential land in the local development authority’s revenue records. If you can buy an agricultural plot, you will not be able to build a house on it. Your construction will be considered unauthorized.
The builder can sell the farm only after obtaining the necessary permission from the local authority. If allowed, it means that the land has already been converted into agricultural or residential land and is no longer agricultural.
What is a loan against agricultural land?
If the land is in a farmer’s name, it can be used as collateral to get a loan from a bank. When a borrower mortgages agricultural land for money, it is known as a “loan against agricultural land” or “agricultural loan”.
Features of agricultural loans
Flexibility in end-use – Agricultural loans can be obtained to cover a variety of expenses related to farm activities, such as buying a new farm/livestock or managing operating expenses and other related activities.
Different Types – There are several types of agricultural loans based on the last use as well as the repayment period.
Minimal documentation – In general, agricultural credit can be obtained with simple and minimal documentation.
Collateral Optional – Based on the loan amount and the applicant’s profile., secured and unsecured agricultural loans are offered.
Some other features of loans on agricultural land are;
- Loans against agricultural land are specially designed for those who cultivate crops like farmers, cultivators, or gardeners. It cannot be taken advantage of by any trader or professional.
- Generally, a farmer does not need to file an income tax return to apply for this type of loan.
- This requires a minimum of documentation.
- With many banks, the loan period goes up to 20 years.
- There are no hidden charges on agricultural loans.
- The lender usually develops a flexible repayment plan based on the farmer’s situation.
- The transition time is fast and banks are sensitive to the harvest season.
- The borrower can use the money for agricultural purposes. That means food processing, purchase of agricultural equipment, dairy units/fisheries/rice mills.
- They can also use the funds to set up a greenhouse, cold storage, or gardening center.
- Buying agricultural insurance to protect crops from damage.
- You can buy livestock or use it to cover your marketing and operating expenses.
Objectives of agricultural loan
- To make small and smallholdings economically viable.
- Cultivation of fallow lands and barren lands.
- Increasing agricultural production and productivity.
- Provide financial assistance to share growers/tenant farmers to purchase land so that they can increase their income.
Eligibility – Small and backward farmers with maximum land limit.
No margin is fixed for loans up to Rs. 100,000 / –
In case of a loan for a higher amount, at least a 10% margin will be fixed.
- Mortgage of land proposed to be purchased with security loan.
- Assumption of crops grown from time to time on land.
- Additional collateral security based on the merits of each case.
Quantum of the loan – The loan amount will depend on the amount of the loan as assessed by the bank or whatever the cost of registration is and the cost of stamp duty will be on the registration charges for the sale/mortgage deed.
Repayment – From 7 to 12 years in half-yearly/annual installments.
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