Heterochromatin is the predominant architectural feature of genomes ensuring genomic stability. It mostly functions in restricting expression of repeats and transposons. The establishment, maintenance and spreading of heterochromatin requires factors such as chromatin modifiers. However, how heterochromatin formation is avoided in protein-coding domains is poorly understood. Here we show that a plant specific paralogue of RNA polymerase (pol) II, named pol IV, is involved in avoidance of heterochromatic marks in protein-coding genes in addition to silencing the repeats and transposons. In its absence, H3K27 trimethylation intrudes the protein coding genes, more profoundly in genes embedded with repeats. In a subset of genes that lack the compensatory silencing, spurious transcriptional activity results in small RNA production leading to post-transcriptional gene silencing. These results show how chromatin boundaries are regulated in plants.