DEFINITION Section 118 of the Himachal Pradesh Tenancy and Land Reforms Act, 1972 has historically restricted non-Himachali buyers from purchasing land. A relaxation for non-Himachali Indian citizens — including NRIs — to purchase residential property in approved colonies of RERA-registered developers without requiring special government permission is currently under consideration. No official notification has been issued till now. Buyers should pay the major portion of payment only after getting the approval or waiver, subject to RERA and FEMA compliance.

This guide explains what changed, what remains restricted, and what a non-Himachali buyer — resident or NRI — actually needs to do to complete a clean property purchase in Himachal Pradesh in 2026.

1. What Section 118 Historically Restricted

The Himachal Pradesh Tenancy and Land Reforms Act, 1972 was enacted to protect the interests of small landholders in the state. The cornerstone provision — Section 118 — restricted the transfer of land to any person who was not an agriculturist of Himachal Pradesh.

For five decades, this meant:

  • A non-Himachali buyer could not directly purchase land in the state.
  • Special permission from the state government was required for any transfer, including for residential purchase.
  • The permission process involved scrutiny by the Revenue Department, the Director of Land Records, and in many cases the Cabinet itself.
  • Approval timelines stretched from 6 months to over 2 years.
  • Many applications were declined without detailed reasoning.

The intent of the law was protective. The practical effect was a near-total freeze on transparent, structured residential development for the non-Himachali buyer market — the very market that drives the state’s tourism economy.

2. What Changed in 2024 and What Is in Force in 2026

In 2024, the Himachal Pradesh government issued amendments and procedural notifications relaxing Section 118 for residential property purchases in approved colonies of registered real estate developers.

The shift, in plain terms:

  • Non-Himachali Indian citizens can now purchase residential property in HP without obtaining special government permission provided the property is part of a colony approved under the relevant town and country planning rules and the developer is RERA registered. No official notification has been issued till now. Customers should pay the major portion of payment only after getting the approval or waiver.
  • NRIs holding Indian citizenship are treated under the same framework. NRI status does not, by itself, create an additional permission requirement — though FEMA compliance applies separately.
  • OCI cardholders and PIO holders are subject to the additional FEMA framework administered by the Reserve Bank of India.
  • The relaxation applies specifically to residential property in approved colonies. Agricultural land, plantation property, and farmhouse purchases continue under the older permission regime.

What this means in the market: the buyer pool for hill-station residential property in Himachal Pradesh has expanded materially. The 2024–2025 period saw measurable activity from Tata Housing, DLF, Eldeco, Sushma, and several boutique developers — each requiring the Section 118 framework to operate cleanly.

The relaxation does not eliminate due diligence. It changes the route, not the destination.

3. What Is Still Restricted

Buyers should not assume the relaxation is a blanket opening. The following remain materially restricted for non-Himachali buyers:

  • Agricultural land. Direct purchase remains barred. Inheritance and gift transfers to family members remain available under their own rules.
  • Plantation land. Tea estates, orchards classified as plantation, similar categories — restricted.
  • Standalone farmhouses on agricultural plots. A farmhouse built on land classified as agricultural cannot be acquired by a non-Himachali buyer.
  • Land outside an approved colony framework. A private plot offered by an individual seller, without the protection of an RERA-registered colony approval, is materially harder and carries elevated risk. Permission may still be required and is rarely granted quickly.
  • Properties in restricted forest, defence, or conservation zones. No general framework permits transfer.

The clean route for a non-Himachali residential buyer in 2026 is: RERA-registered project, in an approved colony, with verifiable title and clear municipal/panchayat approvals. Anything outside this framework should be approached only with specialist legal counsel, not on a developer’s verbal assurance.

4. The Practical Purchase Process for Non-Himachali Buyers

The following sequence reflects what an actual transaction looks like in 2026 for a resident Indian (non-Himachali) buyer purchasing in an approved colony. NRI-specific additions are in Section 5.

Step 1: Verify the project, not the brochure

A glossy presentation is not evidence. The buyer should independently confirm:

  • The RERA registration number on the Himachal Pradesh RERA portal (himachalrera.in)
  • The town and country planning department approval for the colony
  • The land title chain — typically 30 years backward — through an independent legal counsel, not through the developer’s lawyer
  • The encumbrance certificate from the relevant Sub-Registrar’s office
  • The mutation entry and revenue records (jamabandi)

If a developer cannot produce these documents within 48 hours of request, that is the signal to slow down — not to negotiate harder.

Step 2: Sign the agreement to sell, not the booking form

Most buyer-side disputes trace back to having signed only an application form or booking form, not a binding agreement. The agreement to sell should:

  • Identify the property by survey number, area, and approved layout reference
  • State the total consideration, broken into stages aligned with construction milestones
  • Include the possession date, with explicit penalty clauses for delay
  • Reference the RERA registration number and the carpet area as defined by RERA
  • Specify the dispute resolution forum — preferably the HP RERA tribunal, not commercial arbitration

Step 3: Make payments through traceable channels

Cash payments above ₹10,000 are restricted under Indian tax law and create severe complications later, including for capital gains computation on resale. All payments should flow through banking channels — cheque, RTGS, or NEFT — with each transaction tied to a specific construction milestone.

Step 4: Register the sale deed at the Sub-Registrar’s office

Registration is non-negotiable. Stamp duty in Himachal Pradesh varies by buyer category and property value — current rates are available on the HP government’s revenue portal. Registration must occur within four months of the sale deed execution.

Step 5: Update the mutation and revenue records

After registration, the buyer must apply to update the Patwari’s records (mutation, or intkal). Without this, the buyer’s name does not appear in the village revenue records and future transactions become difficult. Mutation typically takes 30–60 days.

Step 6: Apply for utility connections and panchayat tax registration

Electricity, water, and panchayat tax registration are completed in the buyer’s name post-mutation. This is the moment the buyer is fully on record as the owner.

The full sequence — from agreement to sell through to mutation — typically takes 4–6 months for a clean transaction. NRI transactions, due to POA execution from abroad, often take 2–3 months longer.

5. The NRI-Specific Layer: FEMA, NRE/NRO, Power of Attorney

NRI status does not add a permission requirement under Section 118 in 2026. It does, however, add a separate compliance layer under the Foreign Exchange Management Act (FEMA).

Eligibility

Under FEMA and the Reserve Bank of India’s general permission framework, the following can purchase residential property in India:

  • Non-Resident Indians (NRIs) holding Indian citizenship
  • Overseas Citizens of India (OCI) cardholders
  • Persons of Indian Origin (PIO) — limited to the older PIO scheme; new applications are issued as OCI

Foreign nationals without Indian citizenship or OCI status cannot purchase residential property in India under the general permission framework.

Payment routing

NRI buyers must route payment through specific account types:

  • NRE account: Funded from foreign earnings. Repatriable.
  • NRO account: Funded from Indian-source income (rent, dividends from Indian investments). Limited repatriation.
  • FCNR account: Foreign currency non-resident account. Repatriable.
  • Inward remittance through normal banking channels from abroad

Payment from a savings bank account held in India in the buyer’s individual name, or from any third-party account, is non-compliant and creates problems at registration and at sale repatriation.

Power of Attorney

Most NRI buyers cannot complete the entire process in person. The standard solution is a Special Power of Attorney (POA) granted to a trusted family member or licensed professional in India, specifically for:

  • Signing the sale deed at the Sub-Registrar’s office
  • Receiving possession from the developer
  • Handling utility and panchayat registrations

The POA must be:

  • Executed before the Indian consulate in the country of residence, or
  • Executed before a notary in the country of residence and apostilled (for Hague Convention countries) or attested by the Indian embassy (for non-Hague countries)
  • Adjudicated and stamped on arrival in India within three months of execution

A POA holder cannot act outside the powers explicitly granted. A general POA covering ‘all property matters’ is increasingly rejected by sub-registrars — the modern practice is a project-specific Special POA with the survey number and developer named.

Repatriation of sale proceeds

When an NRI sells the property, sale proceeds can be repatriated up to USD 1 million per financial year, subject to:

  • Property held for at least 10 years (if purchased from inward remittance)
  • Capital gains tax paid and TDS deducted by the buyer
  • Form 15CA and Form 15CB filed by a chartered accountant

This is the primary reason NRI buyers should keep meticulous records of the original purchase consideration, all payment receipts, the sale deed, and all stamp duty receipts. These documents are required, sometimes 10–15 years later, to compute the capital gains correctly and to obtain the CA certificate for repatriation.

Tax implications, briefly

NRI buyers are subject to the same tax framework as resident Indians for property held in India:

  • Rental income is taxable in India under Income from House Property
  • TDS at 30% (plus surcharge and cess) on rent paid to NRI landlords by Indian tenants
  • Long-term capital gains tax of 12.5% on property held for more than 24 months (post the 2024 capital gains revision)
  • Short-term capital gains added to income and taxed at slab rates

A chartered accountant familiar with NRI taxation should be engaged from the date of purchase, not from the date of sale.

6. Common Mistakes That Kill the Transaction

In our 30 years of experience across eight cities — and more recently in the hill segment — these are the patterns that consistently derail NRI and non-Himachali transactions:

  • Trusting a verbal ‘Section 118 is no longer an issue’ assurance from a broker without confirming the project’s RERA registration and approved colony status independently
  • Buying directly from an individual seller in a private plot transaction assuming the relaxation applies — it does not, in the same form
  • Signing only a booking form, not an agreement to sell, and then losing leverage when the developer revises pricing or possession dates
  • Paying cash for a ‘discount,’ creating a permanent gap in the audit trail that becomes a tax problem at resale
  • Granting a general Power of Attorney to a relative for ‘any property matters’ instead of a project-specific Special POA — this is increasingly rejected at the Sub-Registrar’s office
  • Mixing payment sources by paying part from an NRE account and part from a third party’s resident account, breaking FEMA compliance
  • Skipping mutation after registration, because the developer says ‘we’ll handle it’ — and then discovering, years later, that the village revenue records still show the previous owner

WHAT THIS MEANS Every one of these is preventable with a 30-minute conversation with an independent property lawyer before signing anything. That cost is in five-figure rupees. The cost of fixing one of these mistakes after the fact is in seven figures, plus the time.

7. Frequently Asked Questions

Can an NRI buy property in Himachal Pradesh in 2026?

Yes. An NRI holding Indian citizenship can purchase residential property in approved colonies of RERA-registered developers in Himachal Pradesh without separate Section 118 permission. FEMA compliance — payment routing through NRE/NRO/FCNR accounts or inward remittance — applies separately.

Does the Section 118 relaxation apply to OCI cardholders?

OCI cardholders are eligible to purchase residential property in India under the RBI’s general permission framework, with the same FEMA payment routing requirements as NRIs. The Section 118 relaxation in approved colonies applies to OCI buyers in the same manner.

Can a non-Himachali buyer purchase agricultural land in Himachal Pradesh in 2026?

No. The 2024 relaxation applies to residential property in approved colonies of registered developers. Agricultural land, plantation land, and standalone farmhouses on agricultural plots remain restricted for non-Himachali buyers. Inheritance and family gift transfers operate under their own rules.

What documents must a developer produce before I sign anything?

At minimum: the HP RERA registration certificate with the project number, the town and country planning approval for the colony, the title chain documents for the land, the encumbrance certificate, the approved building plans, and the latest jamabandi and mutation records. If any of these cannot be produced within 48 hours of request, treat that as a warning signal.

What is the typical timeline for a non-Himachali buyer to complete the purchase?

A clean transaction from agreement to sell through to mutation in revenue records typically takes 4–6 months for a resident Indian buyer. NRI transactions involving Power of Attorney execution from abroad add 2–3 months on average.

Can I purchase property in Himachal Pradesh remotely from Dubai, Canada, or the UK?

Yes. The standard process is to grant a Special Power of Attorney to a trusted family member or licensed professional in India, executed before the Indian consulate in your country of residence (or notarized and apostilled). The POA holder can sign the sale deed, receive possession, and complete utility registrations on your behalf.

Is Section 118 likely to be re-tightened?

This is a policy question that no developer can answer with certainty. As of April 2026, the relaxation framework is under consideration and no official notification has been issued. Buyers entering the market now should pay the major portion of payment only after getting the official approval or waiver. Future amendments, if any, would typically apply prospectively — but the prudent course is to complete registration and mutation promptly, not to delay.

What happens to my purchase if I sell in 5 or 10 years?

A sold property is registered in the buyer’s name. Capital gains tax applies at 12.5% for property held longer than 24 months (long-term), and at slab rates for shorter holdings (short-term). For NRI sellers, sale proceeds are repatriable up to USD 1 million per financial year subject to TDS deduction and filing of Forms 15CA and 15CB.

Closing — Where to Go from Here

The 2024 Section 118 relaxation has opened a structural opportunity in the Himachal Pradesh residential market for non-Himachali Indian citizens, including NRIs. The framework rewards careful buyers — those who verify documents independently, engage proper legal counsel, route payments through compliant channels, and complete mutation properly — and punishes shortcuts.

If you are considering a residential purchase in Himachal Pradesh, the most important first step is identifying a project that is both RERA-registered and located in an approved colony. From there, the process is procedural — and entirely manageable from anywhere in the world.

Vamika Builders has been delivering across North India for three decades. Our active project in Kasauli — Kasauli Green — has RERA registration awaited and is structured for non-Himachali and NRI buyers within the Section 118 framework discussed above.

If you want to understand whether Kasauli Green fits your purchase context, you can book a private discovery call or review the Kasauli Green project page. For broader investor intelligence, download the Vamika NRI Investment Guide 2026 (PDF, gated, no spam).

Disclaimer: This article reflects publicly available information as of 28 April 2026. It is not legal, tax, or financial advice. Specific transactions should be reviewed with a qualified property lawyer and chartered accountant familiar with the buyer’s residency and tax jurisdiction.