An Indian Citizen who stays abroad for employment/carrying on business or vacation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a non-resident. (Persons posted in U. N. Organizations and officials deputed abroad by Central/state Government and Public Sector undertakings on temporary assignments are also treated as non-residents). Non-resident foreign citizen of Indian Origin are treated on par with non-residential Indian Citizen (NRIs) for the purpose of certain facilities.
For the purpose of availing of the facilities of opening and maintenance of bank accounts and investments in shares/securities in India.
A foreign citizen (other than a citizen of Pakistan or Bangladesh) is deemed to be of Indian Origin, if, he, at any time, held and Indian Passport, or he or either of his parents or any of his grand parents was citizen of India by virtue of the Constitution of India or Citizenship Act, 1955 (57 of 1955).
Note: A spouse (not being a citizen of Pakistan or Bangladesh) of and Indian citizen or of a person if Indian Origin is also treated as a person of Indian origin for the above purposes provided the bank accounts are opened or investments in shares/securities in India are made by such persons only jointly with their NRI spouses.
For investments in immovable properties.
A foreign citizen (other than a citizen of Pakistan, Bangladesh, Afghanistan, Bhutan, Sri Lanka or Nepal), is deemed to be of the Indian Origin if he held and Indian Passport at any time, or he or his father or parental grand-father was a citizen of India by virtue of the (Constitution of India or the Citizenship Act, 1955(57 of 1955).
Reserve Bank has granted general permission to foreign citizens of Indian Origin, whether resident in India or abroad, to purchase immovable property in India for their bonafide residential purpose. They ate, therefore, not required to obtain permission of Reserve Bank.
The purchase consideration should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from NRE / FCNR accounts maintained with banks in India.
They are required to file a declaration in form IPI 7 with the Central Office of Reserve Bank at Mumbai within a period of 90 days from the date of purchase of immovable property or final payment of purchase consideration along with a certified copy of the document evidencing the transactions and bank certificate regarding the consideration paid.
Yes, Reserve Bank has granted general permission for sale of such property. However whether the property is purchased by another foreign citizen of Indian Origin, funds towards the purchase consideration should either be remitted to India or paid out of balance in NRE / FCNR accounts.
In respect of residential properties purchased on or after 26th May 1993, Reserve Bank considers applications for repatriation of sale proceeds up to the consideration amount remitted in foreign exchange for the acquisition of the property for two such properties. The balance amount of sale proceeds if any or sale proceeds in respect of properties purchased prior to 26th May 1993 will have to be credited to the ordinary non-resident rupee account of the owner of the property.
Applications for repatriation of sale proceeds are considered provided the sale takes place after three years from the date of final purchase deed from the date of payment of final installment of consideration amount, whichever is later.
Applications for necessary permission for remittance of sale proceeds should be made inform IPI 8 to the Central Office of Reserve Bank at Mumbai within 90 days of the sale of the property.
Yes. Reserve Bank has granted general permission to foreign citizen of Indian Origin to acquire or dispose of properties up to two houses by way of gift from or to a relative who may be an Indian Citizen or a person of Indian origin whether resident in India or not, subject to compliance with applicable tax laws.
Yes. General permission has been granted by Reserve Bank to non-resident persons (foreign citizen) of Indian Origin to transfer by way of gift immovable property held by them in India to relatives and charitable trust / organizations subject to the conditions that the provisions of any other law, including Foreign Contribution (Regulation) Act, 1976, as applicable, are duly complied with.
Yes. Under the general permission granted by Reserve Bank properties other than agricultural land/farm house/plantation property can be acquired by foreign citizen of Indian Origin provided the purchase consideration is met either out of inward remittance in foreign exchange through normal banking channels or out of funds from the purchaser's NRE/FCNR accounts maintained with banks in India and a declaration is submitted to the Central Office of Reserve Bank in Form IPI 7 within a period of 90 days from the date of purchase of the property/final payment of purchase consideration.
| Can they dispose of such property? |
| Yes. |
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| Can sale proceeds of such property be remitted out of India? |
Yes. Repatriation of original investment in respect of properties purchased by foreign citizen of Indian Origin on or after 26th May 1993 will be allowed to be remitted up to the consideration amount originally remitted from abroad provided the property is sold after a period of three years from the date of the final purchase deed or from the date of payment of final installment of consideration amount, whichever is later. Application for the purpose is acquired to be made to the Central Office of Reserve Bank within 90 days of the sales of property in Form IPI 8. |
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| Can the properties (residential / commercial) be given on rent if not required for immediate use? |
Yes. Reserve Bank has granted general permission for letting out any immovable property in India. The rental income or proceeds of any investment of such income are eligible for repatriation.
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Can NRIs obtain loans for acquisition of house/flat for residential purpose from authorized dealers/financial institutions providing housing finance? |
Reserve Bank has granted general permission to certain financial institutions providing housing finance e.g. HDFC, LIC Housing Finance Ltd., etc., and authorized dealers to grant housing loans to non-resident Indian nationals for acquisition of a house/flat for self-occupation subject to certain conditions.
The purpose of the loan, margin money and the quantum of loan will be at par with those applicable to housing loans to residents. Repayment of loan should be made within a period not exceeding 15 years out of inward remittance or out of funds held in the investor's NRE / FCNR / NRO accounts. |
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| Can Indian companies grant loans to their NRI staff? |
Reserve Bank permits Indian Firms/Companies to grant housing loans to their employees deputed abroad and holding Indian passports subject to certain conditions. |
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Can authorized dealer grant housing loan to non-residents of Indian nationality where he is a principal borrower with his resident close relative as a co-obligate/guarantor or where the land is owned jointly by such NRI borrower with his resident close relatives? |
Yes. However, in such cases the payment of margin money and repayment of the loan installment should be made by the NRI
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In whose name should the stamp paper be purchased? Can the client exercise the document on a stamp paper purchased by an Advocate? |
As per Sec. 34 of the Bombay Stamp Act, the stamp papers should be in the name of one of the parties who have signed the documents. Therefore, the stamp paper should be purchased in the name of one of the parties who would be signing the instruments. If the stamp paper has been purchased in the name of an Advocate, C.A., etc. then such instrument shall be treated as an instrument not duly stamped and shall be inadmissible in evidence. |
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What should be the procedure of payment of stamp duty if the document has not been adequately stamped and had been executed about three months ago? What is the position if the document has been executed one year ago? |
The applicant should apply to the Collector under Sec. 40 of the Bombay Stamp Act and should submit the original agreement with two Xerox copies of the same.
The applicant should also give reasons why he could not pay the stamp duty before the execution of the document. In all such cases the Collector may not impound the document and might instead of proceeding under Sec. 33 and / or Sec. 39 of the Bombay Stamp Act may proceed to rectify the same as per the provision of Sec. 41 of the Bombay Stamp Act.
The Collector can recover the stamp duty amount under Sec. 40 and can endorse the instrument as per Sec. 41 of the Bombay Stamp Act and shall certify that proper stamp duty has been paid. On such endorsement the document shall be admissible in evidence and may be registered and acted upon and the authenticated as if it has been duly stamped and shall be delivered to the person who produced the document.
If the document has been executed one year ago then the collector will impound the document and shall proceed under Section 33 and / or Section 39 of the Bombay Stamp Act. The penalty previously was from Rs. 5/- to an amount not exceeding ten times the amount of the proper duty. However now as per the recent amendment 2% penalty per month will be levied by the authorities. |
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Can one obtain refund if the agreement has not been signed and the parties have paid the stamp duty? |
When one person possessing stamp or stamps in his possession which have been spoiled or rendered unfit or unless for the parties intended or the person does not require immediate use of the said stamps then such person should deliver the above said stamps to the Collector.
The person has to make an application under Sec. 52 of the Bombay Stamp Act and the person should also submit the affidavit mentioning the reasons for which the stamps had been purchased and the reasons why the refund application is being made.
If the applicant can convince the Collector then refund of the stamps could be obtained only if: The application is made within six months from the date of the purchase of stamps. The Stamps should have been purchased by such person with a bonafide intention. None of the parties should have signed the paper on which the stamps have been fixed.
On receipt of such application, the Collector is empowered to refund to the said person the value of said stamp deducing there from said amount as prescribed by the competent authorities. |
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| In case of resale of the flat who has to pay the stamp duty, the purchaser or the seller? |
The parties can themselves decide who shall pay the stamp duty. If nothing is mentioned in the agreement then as per Section 30 of the Bombay Stamp Act if the transaction relates to resale of flats then the stamp duty will have to be paid by the purchaser. |
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As regards the payment of stamp duty is the Law of Limitation applicable to the purchase of flat in a Co-operative Society? |
No, there is no law of Limitation applicable for purchase of flats in a Co-operative Housing Society unless such sale deed is registered with the Sub-Registrar of Assurances. If the sale deed is registered with the Sub-Registrar of Assurances then the law of Limitation is eight years from the date of registration of the sale deed. |
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Will Stamp Duty have to be paid if there is a deed of family settlement and a flat is transferred amongst family members? |
| Yes, as per the provisions of Bombay Stamp Act, Stamp Duty will have to be paid on a deed of Family Settlement. |
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| Will Stamp Duty have to be paid if the flat is gifted by a Donor? |
| Yes, Stamp Duty will have to be paid if the flat is gifted by a Donor. |
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Will Stamp Duty have to be paid as on a conveyance in case of resale of flat, if the document has been executed prior to 10-12-1985 the vendor has not handed over possession of the flat to the purchaser? |
No. The Stamp Duty will not have to be paid as on a conveyance if the transaction has occurred prior to 10-12-1985. It will not make any difference if the possession has been transferred by the agreement to sale executed prior to 10-12-1985. The Chief Controlling Revenue Authority has also given the same view in the case of Bank of Maharashtra, Bombay v/s. Superintendent of Stamps. Bombay in Appeal Number S22 of 1990. |
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Is the decree of final order of a civil court by which immovable property is transferred being liable to be stamped as a Conveyance? |
Yes, after the amendment of article 25 of the Bombay Stamp Act, the definition of conveyance has been widened, in view of the amendment decree or final order of the court by which immovable property is transferred is liable to be stamped as a Conveyance. |
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Are orders made by the High Court under Section 384 of the Companies Act, 1956 in respect of amalgamation of companies be liable for payment of stamp duty as on a Conveyance? |
Yes, after the Amendment made in 1993, the preview of Article 25D has been widened so as to bring orders made by the High Court under Section 384 of the Companies Act 1956, in respect of amalgamation of companies. Therefore stamp duty as on a Conveyance will have to be paid on such orders. |
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| What are the important judgments which refer to determination of market value? |
Some of the judgments which can be of assistance in determining the market value are:
1) Reghubans Narain v/s Government of U.P. (AIR 1967 SC 465) which arises out of land Acquisition Act where the Supreme Court has held that market value on the basis of which consideration is payable under Section 23 of the Act means, the price that a willing purchaser would pay to the willing seller for a property having due regard to its existing advantage and its potential possibilities laid out in its most advantageous manner excluding any advantageous due to the carrying out of the scheme for the purpose for which the property is compulsorily acquired. |
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| What are the consequences of under valuation of document? |
It must be noted that if the collector has reason to believe that the instrument does not mention the true market value and such instrument has already been presented for registration, he can take a step for recovery of the duties by coercive measures only after giving reasonably opportunity to the opposite party of been heard.
If the collector determines that the proper stamp duty has not been paid penalties can be levied on such instruments. The penalty can be levied at 2% per month for the period of default, till the time the proper stamp duty has not been paid as stated in this section the instruments are liable to be impounded.
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| In a welfare society what should be the approach of a common man or an assessee while paying the Stamp Duty? |
No doubt, it is the duty of the common man and assessee to pay the taxes to the Government when they are just and reasonable. However, even the Supreme Court of India has stated that it is the duty of the assessee to pay the taxes to the state. At the same time, it should be remembered that when it is beyond the capacity of common man to pay the taxes he cannot be forced to do so.
It will be worthwhile to remember that the House of Lords have stated that if there be a means of evading stamp duty. So much the better for those who can make it. It is no fraud upon the crown. It is a thing which they are perfectly entitled to do. |
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A flat has been purchased for Rupees Eighty lakhs after filing Form No. 37-I. Can the stamp authorities contend that the market value of the said property is Rupees Eighty Five Lakhs? |
Stamp Duty has to be paid on the market value of the property. This led to instances whereby flats purchased after obtaining the N.O.C. from the Income Tax Authorities (which has the power to acquire the property if their has been under valuation in excess of the prescribed limit i.e. Rs. Ten Lakhs earlier and now Rs. Seventy Five Lakhs) were not accepted as the market value of the property by the Stamp Authorities. This had continued for more than seven years.
Many Professionals, Associations, (including the Federation of Association of Accommodation Industry), Newspapers related to accommodation (i.e. Accommodation Times), had protested against the same. Doubts as to market value had been raised in flats purchased in public auction.
Since the introduction of the Bombay Stamp (Determination of True Market Value of Property) Rules 1995 whenever a certificate about market value of a particular property is issued by a Appropriate Authority under provisions of the Income Tax Act, or if a property is sold or allotted by Government or Semi-Government body or Government Undertaking or local authority on the basis of predetermined price, then value stated in such certificate issued by an appropriate authority or determined by the bodies referred to above, shall be the true market value of the subject matter (property).
Now irrespective of the year of purchase in view of the above rules the authorities are duty bound to accept the value reflected in the Agreement if the premises are purchased after obtaining the Certificate of the Appropriate Authority (Income Tax). |
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| Documents to be verified before Purchase of a Flat? |
Before you purchase a flat, you have to have a title and document search conducted by a competent advocate. You cannot do it yourself. You have to use the services of a competent advocate. It is a professional job to be done with professional assistance. |
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| What is the difference between Built up Area, Super Built up Area and Carpet Area? |
Carpet Area: This is the area of the Apartment / Building which does not include the area of the walls. Built up Area: This includes the area of the walls also. Super Built up Area: This includes the Built up Area along with the area under common spaces such as the Lobby, Lifts, Stairs etc. This term is therefore only applicable in the case of multi-dwelling units. |
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| What are all the important documents one should check before buying any property? |
If you want to purchase a property, you have to look at the approved layout plan, approved building plan, ownership documents, carryout search, etc. Contact an advocate before you purchase a property so that he can advise you. |
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| Who is liable to pay Stamp Duty to the Buyer or the Seller? |
The liability of paying Stamp Duty is that of the buyer unless there is an agreement to the contrary. Section 30, of the Bombay Stamp Act, 1958 states the liability for payment of Stamp Duty. |
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| The Stamps are required to be purchased in whose name? |
| The Stamps are required to be purchased in the name of any one of the executors to the instrument. |
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What is meant by the market value of the property and whether Stamp Duty is payable on the market value of the property or on consideration as stated in the agreement? |
Market value means the price at which a property could be bought in the open market on the date of execution of such instrument. The Stamp Duty is payable on the agreement value of the property or the market value which ever is higher. |
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| Which are the instruments that attract payment of Stamp Duty on? |
The instruments like Agreement to sell, Conveyance Deed, Exchange of Property, Gift Deed, Partition Deed, and Power of Attorney, Settlement and Deed and Transfer of Lease attract Stamp Duty on market value of the property. |
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| Who is the appropriate authority for knowing the market value of the property? |
The Sub-Registrar of the area in whose jurisdiction the property is located is the appropriate authority for knowing the market value of the property. |
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| Who is the appropriate authority for knowing the market value of the property? |
| Purchasing a flat on a POA basis is not permitted under the law of the land. |
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| Is a POA Revocable? |
| Yes, POA can be either revocable or irrevocable, depending on what sort of a POA one has made. |
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| What exactly do we mean by a Free Hold Flat? What are the advantages and disadvantages, if any? |
A freehold property (plot or a flat) is one where there is a whole and sole owner(s) ownership is full and unconditional (within the provisions of the laws of the land) and there is not lessor / lessee involved. |
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| How to convert a POA flat into a Free Hold one? |
POA cannot be converted into anything. Leasehold properties of DDA in Delhi can be converted to freehold, as per provisions. |
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How to verify the authenticity of the various documents submitted by the seller of the house, particularly with regard to the possibility that the house has not been sold earlier to a third party? |
| Regarding authenticity of documents, again you have to take the help of an advocate to verify. |
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Do we have any agency in Delhi which can provide a comprehensive service under one roof for hassle free purchase of society flats for its customers? |
Comprehensive services in the real estate sector are provided by several brokers in various cities of India. In the directory of services on our portal www.indiaproperties.com you can find a list of them and you can contact them directly. |
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| A flat in a Co-op. Hsg. Society is to be gifted. What are the legal formalities? What about Stamp Duty? |
Gift of an immovable property is considered as a 'transfer' under the provisions of the TOP Act and you have to have the transaction registered through a Gift Deed and pay Stamp Duty as per provisions of the relevant Stamp Act depending in which state the property is situated. |
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Upon buying a flat from a builder in a building under construction, what are the permissions and papers that one should check with the builder, so as to ascertain the genuinity of the builder? |
When you are buying a flat from a builder in a building under construction, you have to check the following: Approved Plan of the Building along with the number of floors. Ensure that the Floor what you are buying is approved. Check if the land on which the Builder is building is his or he has undertaken an agreement with a landlord, if so, check the title of the land ownership with the help of an advocate. Check the Building byelaws as applicable in that area and ensure that the builder is building without any violation of front setback, side setbacks, height etc. Check Specifications given in the Agreement to sell off the Sale Brochure. Is he providing the same actually on the ground or not? Check the Reputation of the Builder. Ensure that Urban Land Ceiling NOC (if applicable) has been obtained or not. NOC from Water and Electricity Authorities also have to be obtained. NOC from lift authorities.
Practically every developer has to form a Co-operative Society at one point of time or another. With the limited amount of options available with regard to management of the affairs of the building i.e. (a) condominium (b) Private Limited Company and (c) Co-operative Society, (excluding the unrealistic rental housing), it will not be an exaggeration to state that in at least 90% cases particularly in Mumbai, the Promoters and / or the Builders have formed a Co-operative Society. The basic requirements for Registration of Co-operative Housing Society normally are not known to the flat purchasers. It is here that apart from the statutory obligations cast upon the builder, the builder as a friend, philosopher and guide of promoters helps in forming a Co-operative Society. |
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| What are the different types of Housing Cooperative Societies? |
There are basically four types of Co-operative Societies connected with the housing. (a) Open Plot Societies (b) Flat Owners Societies (c) Tenant Societies (d) Housing Board Societies. In Open Plot Societies, members purchase or take on lease a plot of land and themselves construct the building. Due to bureaucratic formalities and lack of specialized knowledge, a few societies are formed under the head of Open Plot Societies. When a builder constructs flats and sells them to Flat Owners, the Society when formed is called Flat Owners Society. When Landlord forms a Society of tenants, it is called Tenants Society. When a Society is formed by Allotters of flats and building is constructed by the Housing Board Authorities, i.e. Mumbai Housing and Development Board, then the Society so formed is of the type of Housing Board Society. The procedure that should be followed for formation of societies of the above said types is different for different types of Societies. Members who wish to form Co-operative Housing Societies are generally ignorant of the procedural aspects and as a result of the same they have to run from place to place and get entangled in bureaucratic delays. |
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| What is the procedure for Registration of a Society? |
The procedure for Registration of a Society begins with electing a Chief Promoter in a meeting of the Promoters. The builder under the Flat Owners type of Co-operative society has the first right to act as the chief promoter. The developer / flat purchasers should call for a meeting of the Promoters by issuing the notice under Agenda of the meeting giving at least 14 days notice to the Promoters. In this meeting, a Chief Promoter is elected who can exercise such powers and carry out such functions as are mentioned in the minutes of the Promoters of the proposed Co-operative Society. After electing the Chief Promoter, the proposed name of the society has to be decided by the Promoters.
Normally, the same reservation proposal should be accompanied with the signature of at least 10 Promoters who have attended the meeting. It is a common belief that the Society should consist of at least 10 members. If the number is less than 10 then special permission from Government has to be taken. In such cases, the garages / car parking may be allotted to other relatives of the promoter to reach number of 10. it would be of interest to note that the model bylaws define flat as a "Flat means a separate set and self-contained set of premises used or intended to be used for residence, or office or show-room, or shop, or godown and includes a garage, or dispensary, or consulting room, or clinic, or flour mill, the premises forming part of a building and includes an apartment". On allotment of name and permission to open a bank account by the Registrar, the Chief Promoter has to collect Share Capital, Entrance Fees from promoters and deposit the same in the branch of the bank permitted by the Registrar. It should be noted that the amount cannot be withdrawn from the Bank till the Society is Registered or its Registration is refused, except with prior written permission of the Registrar. The Chief Promoter should submit Registration Proposal to the Registering Authority within a period of 3 months from the date of issue of Letter of Reservation in the name of the proposed society. |
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| What are the documents required for Registration of a Society? |
| The documents that are normally to be submitted to the Registering Authorities are as under: |
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Application for registration of Society in Form A along with Statement A. Enclosure to application for Registration as per Rule 4(1) of Maharashtra Co-operative Societies Rules, 1961. |
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Information about proposed society in Statement 'B' (vide Govt. Circular dated 2-5-1980) |
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Information about promoter members of the proposed society in Statement 'C' (vide Govt. Circular dt. 2-5-1980). |
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A Statement of Accounts as per Form D. |
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Model Bye-Laws. |
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Bank Balance Certificate. |
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R.B.I./Treasury Challan for payment of Registration Fee of Rs. 500/- |
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Title Clearance Certificate from an Advocate. |
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A true copy of the approved Building Plan. |
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Letter of Authority granting permission to commence construction work / Completion Certificate (if applicable). |
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Affidavit on Rs. 20/- Stamp Paper from at least 10 promoter members to the effect that they are residing in the area of operation of the Society (Proposed), made before a Competent Authority. |
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Affidavit from the Chief Promoter on Stamp Paper of Rs. 20/- executed before the Competent Authority in Form 'Y'. |
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Certified True Copy of Agreement made on Stamp Paper and Registered between the builder, promoter and purchasers of flat. |
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Where the promoter members are firms/companies, a letter of authority from such firms / companies authorizing the promoter to sign on behalf of firm / company. |
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In case of such proposed societies, names of 60% of the flat holders of the total number of flats constructed or proposed to be constructed as per the plan approved, must be included in Statement 'A' to be attached to the Registration Proposal. |
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| What happens after submission of documents? |
It is the duty of the Registrar to register the society and on registration of the society, it becomes a separate legal entity. Thereafter, the management of the affairs of the society is carried out by the managing committee which is elected by the general body meeting of the society. It may be of interest to note that in a co-operative society, the principle is one member one vote. In a co-operative society, the right to be exercised in the general body meeting is a personal right. This is one of the reasons why even a person holding a power of attorney cannot attend the general body meeting of the society. The quantum of the capital being introduced by the member is not of much importance. Preference should be given for formation of a private limited company if one member proposes to acquire majority of the flats. |
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| How much housing loan can one get? |
Housing loan will be sanctioned depending upon your repayment capacity and according to your income. Your spouse's income can be included, if you want to increase the amount of your loan. The maximum loan that can be sanctioned varies with housing finance companies and ranges from Rs. 10 lakh to Rs. 1 crore. |
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| What are the tax benefits that are available if one avails of housing loan? |
Tax benefits are available on both the principal and interest components of the loan as per the Income Tax Act. The upper limit of the amount of deduction of interest repayment allowed from your gross total income is now Rs. 1,50,000 p.a. Besides, Sec. 88 offers you tax benefits for principal repayments. The principal repayment amount included in the overall limit of Rs. 60,000 offered by this section is Rs. 20,000. |
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| What is reducing balance? |
Reducing balance is the method of reducing the principal amount already paid, from the outstanding loan amount. Every time you make a payment, you pay interest on that part of the original principal sum that has remained un-repaid till then. |
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| Which loan is cheaper the monthly reducing balance or the annual reducing balances? |
The best way is to compare the EMI's and the tenures of the two home loans. The loan carrying the lower EMI for the same tenure is the cheaper option. |
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| What is a fixed rate home loan? |
| A fixed rate home loan is a loan where the interest rate is constant over the entire tenure of the loan tenure. |
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| What is a floating interest rate? |
A floating interest rate loan is a loan where the interest rate payable is linked to the market rate like the bank lending rate. As the bank rate varies, the interest rate payable by you will also rise and fall. Hence you will have to bear the risk of interest rate fluctuations; the floating interest rates offered are slightly lower than the fixed interest rates. |
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| What is a Home Extension Loan? |
A Home Extension Loan is a loan which helps you to meet the expenses of any alteration like extension / expansion or modification of your home. You can avail of a Home Extension Loan, after obtaining the requisite approvals from the Municipal Corporation. |
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| What is Home Improvement Loan? |
A Home Improvement Loan is one that is made available for you to do certain external work like structural repairs, waterproofing or internal work like tiling and flooring, plumbing, electrical work, painting etc.
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