What is the Advantage and Disadvantage of Agricultural Land?

Sujan Afi S

Suppose you are an employee of a private/government sector. You are very dedicated to your work. You always try to be very punctual. One day you wake up late. Maybe you had a hectic schedule the day before!

You rush to the bathroom to freshen up, you dress up quickly, pack your lunch, and you are out for the day. While driving you realize that you have forgotten your file at home! 

It is always good to have a little patience before taking any decision because the steps that we take emotionally or quickly may prove to be harmful in the near/distant future. Likewise, the decision to buy any house or the decision to buy any land will prove successful if you do a thorough research before making an investment.

The buyers/investors are innovating novel methods of making profit. One of the ways is investing in agricultural land. Some people prefer to consider the land as an asset, while there are others who tend to cultivate crops, fruits, rear animals, etc. and make extra profit. You may consider the current renting climate, the market patterns, legal constraints and clearances, the distance from significant business hubs, etc before you make any decision. Once you are done with this you can go for the investment. 

However, nothing is perfect in itself. There will be several benefits as well as disadvantages. In this article we will go through some advantages and disadvantages of making an investment in an agricultural land.

Advantages of Buying an Agricultural Land

  1. One of the most evident advantage of buying agricultural land is that it is generally cheaper than the residential plots. However, it depends on the circumstances. 
  1. If the agricultural land plot is a part wherever the builder or developer or the buyer has planned some infrastructure related project or any other big project in future then the land will guarantee long-run returns. For example, if you plan to construct a factory that will produce saffron, silk, etc. or if you want to produce honey or rear animals, then you can buy an agricultural land.
  1. Another advantage of buying agricultural land is getting exempted from paying wealth tax (a type of levy imposed upon the profit made from the entire possession of the assets). As the land is an agricultural one, thus, the surplus that you make out of it will typically not be subjected to taxation.
  1. You will get enough compensation money if the government takes the land from you for some public development purposes. As per the Land Acquisition Act, 1894, the government has the discretion to cease the private land of a person for general betterment. However, in that situation the government gives enough compensation to the owner of the land.
  1.  Apart from this, you can simply buy an agricultural land for planting some crops which will save you a huge chunk of money in the long run. Thus, you might procure enormous benefits. You can even give the land to someone else for planting some healthy crops, fruits, etc. and ask him to give you your share of profit. Further, you can even sell the land later on when the price of the land increases.
  1. Real Estate agents can purchase an agricultural plot in rustic regions around the city, as, presently, various state governments have considered agricultural lands for lodging improvement and modern purposes. As of late, the state administration of Gujarat has declared that land designers will be permitted to buy agrarian land for reasonable lodging under the Gujarat Tenancy Act.

Disadvantages of Buying an Agricultural Land

  1. You will have to be a farmer to buy an agricultural land in India. Though a few states are excluded from the list, but this is the case in almost all the states.
  1. It is a tough job to convert an agricultural land to a residential land. The land that is to be converted must be infertile and dry. No fertile agricultural land can be easily converted to a residential one.
  1. If the buyer isn’t an expert in understanding the legal guidelines of buying an agricultural plot and also the terminologies used within the path of the transaction, buying an agricultural land might be extraordinarily difficult for him. Different states have different laws. So, you can go through the laws before investing on an agricultural land. Try to be well versed in the legal matters related to buying agricultural lands to safeguard yourself from hassles in future.
  1. If you think of giving the land in lease to any farmer/person, then the profit that will be generated from the land will be dependant on the type and the quality of crops or items produced in the land. Further, the climatic conditions, the availability of water, etc. are some factors that affect the income.
  1. There are certain states in India which have strict restrictions upon the total area of land the residents of the state can buy. Thus, it would be always better to have a clear knowledge of the total area that you can buy.

In the End..

Investing on a land is very different from buying a house. The profit that you will get in return will considerably depend on the type of business that you do. Suppose, if you rear animals then you will have more income than that you will have by growing crops.

I really hope that the above text has given a clear picture of the pros and cons of agrarian land. Nevertheless, in case of any doubt you can write to us. You can visit our official website too for more such informative articles related to real estates.

Roodland India is one of the leading companies of Real Estates. It has its dedicated team to answer your queries and to guide you in the best possible manner.


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