Section 118 Himachal Pradesh: Who Needs Permission to Buy Land, and How to Get It
Section 118 of the Himachal Pradesh Tenancy and Land Reforms Act, 1972 stops land in Himachal from passing to anyone who is not an agriculturist of the state unless the State Government first gives permission. It applies to outsiders, NRIs and companies, and also to Himachalis who do not farm. If you want to open a hotel, café, homestay or unit in Manali, Kullu or Shimla, this is the first thing to settle, before you sign anything, pay an advance or spend on construction.
What section 118 covers
- Who it applies to: any non-agriculturist. That includes Indians from other states, NRIs and OCI holders, companies, LLPs and firms (even ones owned by Himachalis), and Himachalis who are not agriculturists in the revenue record.
- What it stops: any transfer of land, including a sale, gift, exchange, lease or mortgage with possession, without the government’s permission. The sub-registrar will not register the deed without the permission order.
- What happens if you ignore it: the transfer is void. After an inquiry the Collector can declare it illegal, and the land and anything built on it vest in the State Government.
The last point is why informal workarounds are dangerous. Buying in a local friend’s name, a power of attorney “sale”, or a long lease dressed up as something else are exactly the arrangements the law treats as void, and you can lose both the land and the building.
When you do not need permission
- Land that passes to a legal heir by inheritance, or by gift to a legal heir.
- A built-up house or flat inside a municipal corporation, municipal committee or notified area. Agricultural land on the edge of town is not covered by this.
- Property allotted by HIMUDA or in a Development Authority scheme.
- Taking a house on lease in an urban area, which an earlier amendment freed from permission.
Check that the exact property falls inside one of these. The boundary of a municipal area, or whether a plot is recorded as built-up or agricultural, decides the answer, and it is shown in the revenue record, not in the property dealer’s brochure.
How permission is given
- Apply in Form LR-XIV through the Deputy Commissioner of the district, online or at the DC office. The case goes from the SDM and DC to the Revenue Department, and larger cases can go to the Cabinet.
- State the purpose: a house, a shop, a hotel or tourism unit, an industry, and so on. Commercial and industrial purposes need an essentiality certificate from the department concerned, for example Tourism for a hotel or Industries for a factory.
- Attach the documents: identity and address proof, the jamabandi and tatima (map) of the land, the site plan, the essentiality certificate, and the seller’s consent.
- Wait: there is no fixed time limit, and six months to a year is common.
The permission is for a stated purpose and a limited area. For individuals the rules generally allow up to 500 square metres for a house and 300 square metres for a shop, and a project is allowed what it can show it needs.
Conditions after you get it
- Use the land for the approved purpose within two years of registration. The government can extend this by a year, with reasons.
- Do not change the purpose without fresh permission. A house cannot quietly become a hotel.
- Selling later to another non-agriculturist needs its own permission.
- If the conditions are broken, the land can vest in the government.
Stamp duty on purchases by non-agriculturists is also higher than on ordinary purchases, so budget for it.
Routes for a business in Manali, Kullu or Shimla
| Route | Permission needed today? | Watch out for |
|---|---|---|
| Buy land and build a hotel or café | Yes, with an essentiality certificate | The two-year use condition and the area limit |
| Buy a built-up property inside a municipal area | No | Check the boundary and the record before paying |
| Lease a building in a town | No | Get the lease registered and the tenancy properly documented |
| Lease a building in a village | Yes, under the current law | The 2025 amendment bill would change this (see below) |
| Run a registered homestay | Not applicable | Homestay registration goes only to the owner, so a leased house cannot be a homestay |
The 2025 amendment bill
The Himachal Pradesh Tenancy and Land Reforms (Amendment) Bill, 2025 was introduced in the Assembly on 1 December 2025. It would let houses built in rural areas be leased for up to ten years without permission, let houses already built with permission be sold on without a fresh one, and give developers more time for delayed projects on payment of a penalty. On 5 December 2025 the Assembly sent it to a Select Committee chaired by the Revenue Minister. Until it is passed and notified, the current law applies, so do not plan a rural lease on the assumption that it will.
Frequently asked questions
Can a person from outside Himachal buy land in Manali?
Only with the State Government’s permission under section 118, for a stated purpose and a limited area. A built-up house or flat inside a municipal area can be bought without permission.
Does a Himachali need section 118 permission?
Yes, if he or she is not an agriculturist in the revenue record. Being a resident of Himachal is not enough on its own.
Can a company buy land in Himachal?
Only with permission. A company is a non-agriculturist even if all its shareholders are Himachali farmers.
How long does section 118 permission take?
There is no fixed time limit. Six months to a year is common, and longer for large or sensitive land.
What happens if the land is not used within two years?
The government can extend the period by one year. If the land is still not used for the approved purpose, it can vest in the State Government.
Setting up in Himachal with TAXAJ
Section 118 is a land and revenue matter, and the permission itself is handled with a local advocate. TAXAJ handles the business side around it: choosing between a company or LLP, the project report behind an essentiality certificate, GST registration, and the accounts once you open. See our guides to starting a company in Himachal and the Home Stay Rules 2025, or talk to our Manali team.
Last updated 16 October 2026. Sources: section 118, Himachal Pradesh Tenancy and Land Reforms Act, 1972, and the rules under it; Himachal Pradesh Tenancy and Land Reforms (Amendment) Bill, 2025 (Bill No. 25 of 2025), referred to a Select Committee on 5 December 2025. General information only, not legal advice; have a local advocate check the revenue record of the exact land before you pay anything.
