Introduction:

A recent parliamentary session witnessed the mention of “Tokenization Bill” by Mr. Raghav Chadha, a member of Rajya Sabha. The suggestion is particularly interesting because while tokenization of real estate assets is not a very new concept in countries like the United States of America which witnessed a rise in real estate tokenization in the year 2018, it is still a budding concept in India. Contrary to the foresaid, the concept of tokenization vis-à-vis real estate gained traction in India around late 2023-early 2024. To give an understanding of real estate tokenization in one sentence- it will allow retail investors to buy real estate in bite sized portions. The concept involves use of blockchain technology to make a real estate asset divided into small digital tokens which are then offered for investment to the willing investor. In other words, it means dividing up a single property into small tokens that exist on blockchain which is a digital database used to record information in a secure way. Each token would represent separate ownership/claim when bought by different investors.

Current position:

Currently, India does not have a codified law governing and regulating the tokenization of assets such as real estate and intellectual property. Even though there is no specific authority which governs tokenization in India, currently, the International Financial Services Centres Authority (IFSCA) has taken the most definite steps to regulate tokenization within the zone designated as GIFT city International Financial Services Centre. The IFSCA constituted an expert committee on asset tokenization in September 2023 and have even issued a consultation paper dated 26thFebruary 2025 titled as “Regulatory Approach Towards Tokenization of Real-World Assets” whereby, they sought suggestions from the stakeholders to establish a regulatory framework for the “real world assets”.

A codified tokenization law without a doubt has the potential to revolutionize the real estate investment market in India by reducing property disputes as the digitalization would bring about transparency in record keeping.

The market would be open to the buyers even at a middle-income level as they would be able to invest in real estate by fractional ownership i.e. without having to buy the entire property, hence, resulting in a democratized structure. Tokenization also has the potential to boost real estate market in non-metropolitan cities in India, and this leap has the potential to enable the inclusion of common people in wealth creation. It could also prove fundamental in boosting technology-based startups thereby generating employment. The investors would be able to purchase real estate with the involvement of fewer intermediaries.

This suggestion to codify tokenization law comes at a time where by way of a recent judgement dated 7th November, 2025, the Hon’ble Supreme Court of India, in the matter of “Samiullah vs. the State of Bihar” advocated the adoption of emerging technologies such as blockchain to ensure transparency in maintaining land records among other things and urged the Law Commission to examine the feasibility of adopting such technology. The Hon’ble court observedthat adopting blockchain technology could lead to restructuring and reviewing existing laws such as Transfer of Property Act, 1882, Indian Stamp Act, 1899, and Registration Act, 1908, Information Technology Act, 2000, Data Protection Act, 2023. The Hon’ble court has also observed that implementation of such technology with proper laws and safeguards has the potential to transform land registration into more secure, transparent and tamper proof system.

Key questions that need to be addressed before implementation of a codified tokenization law with respect to Indian market:

It’s safe to say that implementation of tokenization bill would not come without its challenges considering India has a history of long-standing property disputes. India functions on a “buyer beware” model when it comes to real estate purchases meaning that the property records maintained by government authorities in India (such as mutation records) are not conclusive evidence of title, they are presumed to be true unless challenged. A buyer is required and advised to conduct comprehensive title search before buying any property by traditional methods.

Now, having said that, while implementing a codified law for tokenization, the policy makers would need to address certain critical issues, for instance, the existing registration act requires any instrument transferring right, title and interest in an immoveable property to be compulsorily registered, in light of this the tokenization law would be required to address two very important challenges: the need for execution of a title document every time a willing investor buys a digital token and whether such instrument would also require registration.

Additionally, drawing from the judgment “Samiullah vs. the State of Bihar”, the tokenization law would need to address whether the traditional record keeping be completely replaced with digital record keeping of the property offered for real estate token (RET) investments or would both methods exist in harmony?

Currently, Real Estate Regulation and Development Act, 2016 (RERA) operates to ensure transparency in the real estate sector by regulating construction, development, sale, purchase of plots, buildings etc. With the implementation of a tokenization law, RERA’s role would need to be clearly defined specifically in cases where construction is undertaken over the piece and parcel of land which is offered as RET to a willing investor.

The tokenization law must very clearly define the role of Securities and Exchange Board of India (SEBI) considering the RETs could be sold in real time similarly to the listed securities.

Further, property laws are very state specific in India, and a centralized tokenization law needs to be implemented in a way which would operate harmoniously with the state laws.

Conclusion:

With proper regulation and safeguards, tokenization can transform real estate ownership in India. Adoption of blockchain technology whether for tokenization or for maintenance of records to do away with colonial system of record keeping could prove revolutionary to the real estate market which India is in dire need of. It would be a very bold step towards financial inclusion in India. An ambitious approach towards tokenization may lead to complete digitalization of records ensuring transparency and potentially resolving India’s long standing title dispute challenges.

However, the success of introducing tokenization into the Indian economy would depend on clear and harmonized framework, addressing interstate legal inconsistencies and clearly defining the role of each regulatory body in the tokenization framework by avoiding any regulatory overlaps. It remains to be seen whether blockchain can finally replace colonial ledgers in the long run.

Author: Shruti Choudhary (Senior Associate at Ahlawat & Associates)