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What does the term 'Leasehold Property' mean?

When a piece of property is given or ‘leased’ to an individual (known as the ‘Lessee’) for a stipulated period of time, by the owner of the property (known as the ‘Lessor’), the property is referred to as Leasehold Property. A certain amount is fixed by the Lessor to be paid as lease premium and annual lease. The land ownership rights remain with the Lessor. Transfer of property requires prior permission.

What does the term 'What is Registration?

When you buy a property in India for residential or commercial purposes, the legal ownership change must happen. It occurs when you register the immovable asset in your name in the records maintained by the government. Registration refers to this process of recording the document in the presence of a registering officer. After the registration, the registration office preserves the copies of the original document for future use.

What does the term 'Should I Register My Flat?

As mentioned earlier, the Government of India has made it mandatory to register any property bought in the country according to the Registration Act 1908. This act indicates the compulsory registration of all properties purchased of value exceeding INR 100. The rule also applies to the property you receive as a gift even when you have not spent money to purchase it. Not registering the property can result in a penalty according to the Registration Act 1908.

What does the term 'Should I Pay More Charges During The Registration? If So, What Charges Are Applicable?

Buying a property and registering it involves paying extra money. So, you need to remember that when you plan to buy a property, the final price is not the amount quoted by the seller. It is only the money you need to pay the seller. Easily, you need to add other charges such as stamp duty and registration charges to it. Most people fail to register the property due to the need for payment of the excess amount. But, paying the stamp duty and registration charges can only give legal status to the sale.

What Do You Mean By Stamp Duty

Stamp duty refers to the fee levied by the state government of the place you buy the property. It is collected on the documents needed for property registration. The stamp duty and registration charge in India vary from one state to another. Paying stamp duty is mandatory while registering the property according to Section 3 of the 1899 Indian Stamp Act.

What does the term 'Should I Pay More Charges During The Registration? If So, What Charges Are Applicable?

Buying a property and registering it involves paying extra money. So, you need to remember that when you plan to buy a property, the final price is not the amount quoted by the seller. It is only the money you need to pay the seller. Easily, you need to add other charges such as stamp duty and registration charges to it. Most people fail to register the property due to the need for payment of the excess amount. But, paying the stamp duty and registration charges can only give legal status to the sale.

What does the term 'Should I Pay More Charges During The Registration? If So, What Charges Are Applicable?

Buying a property and registering it involves paying extra money. So, you need to remember that when you plan to buy a property, the final price is not the amount quoted by the seller. It is only the money you need to pay the seller. Easily, you need to add other charges such as stamp duty and registration charges to it. Most people fail to register the property due to the need for payment of the excess amount. But, paying the stamp duty and registration charges can only give legal status to the sale.

What is the difference between carpet area, built-up and super built-up area?

The area of an apartment or building, not inclusive of the area of the walls is known as carpet area. This is the area that is actually used and in which a carpet can be laid. When the area of the walls including the balcony is calculated along with the carpet area, it is known as built-up area. The built-up area along with the area under common spaces like lobby, lifts, stairs, garden and swimming pool is called super built-up area.

Do PIO's require permission of Reserve Bank to purchase immovable property in India for their residential use?

Reserve Bank has granted general permission to foreign citizens of Indian origin, whether resident in India or abroad, to purchase immovable property other than agricultural land/farm house/plantation property, in India. They are, therefore, not required to obtain separate permission of Reserve Bank or file any declaration.

In what manner should the purchase consideration for the immovable property be paid by PIO's under the general permission?

The purchase consideration should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from any non-resident accounts maintained with banks in India.

Can such property be sold without the permission of Reserve Bank?

Yes. Reserve Bank has granted general permission for sale of such property. However, where another foreign citizen of Indian origin purchases the property, funds towards the purchase consideration should either be remitted to India or paid out of balances in non-resident accounts maintained with banks in India.

Can sale proceeds of such property if and when sold be remitted out of India?

In the event of sale of immovable property other than agricultural land/farm house/plantation property in India by a NRI or PIO, the authorized dealer may allow repatriation of the sale proceeds outside India, provided all the following conditions are satisfied: –
The immovable property was acquired by the seller in accordance with the provisions of the Exchange Control Rules/Regulations/Law in force at the time of acquisition, or the provisions of the Regulations framed under the Foreign Exchange Management Act, 1999.
The amount to be repatriated does not exceed (a) the amount paid for acquisition of the immovable property in foreign exchange received through normal banking channels or out of funds held in foreign currency non-resident account or (b) the foreign currency equivalent, as on the date of payment, of the amount paid where such payment was made from the funds held in non-resident external account for acquisition of the property; and In case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties.

What other facilities are available for repatriation?

Authorized dealers can allow remittance up to USD 1 million for any purpose, per calendar year from balances in NRO accounts subject to payment of applicable taxes. The limit of USD 1 million per year includes sale proceeds of immovable properties acquired by the NRI/PIO’s while they were resident in India and held for a period of 10 years and above. In case the property is sold after being held for less than 10 years, remittance can be made if the sale proceeds were held for the balance period in NRO account or in any other eligible instruments.

Can PIO's acquire or dispose of immovable property by way of gift?

Yes. Reserve Bank has granted general permission to foreign citizens of Indian origin to acquire or dispose of immovable properties other than agricultural land/farmhouse/plantation property by way of gift from or to an Indian citizen, NRI or PIO.

Can authorized dealers grant loans to NRIs for acquisition of a flat/house for residential purposes?

Authorized dealers have been granted permission to grant loans to NRI’s for acquisition of house/flat for self-occupation on their return to India subject to certain conditions. Repayment of the loan should be made within a period not exceeding 15 years out of inward remittance through banking channels or out of funds held in the investors’ NRE/FCNR/NRO accounts.

Can authorized dealers grant housing loan to NRI's where he is a principal borrower with his resident close relative as a co-applicant / guarantor or where the land is owned jointly by such NRI borrower with his resident close relative?

Yes. Such housing loans availed in rupees can also be repaid by the close relatives in India of the borrower.

What are the guidelines for acquisition of agricultural land / plantation property / farmhouse by NRIs and foreign citizens of Indian origin?

All requests for acquisition of agricultural land / plantation property / farm house by any person resident outside India may be made to The Chief General Manager, Reserve Bank of India, Central Office, Exchange Control Department, Foreign Investment Division (III), Mumbai 400 001. For further information please visit the FAQ Section of http://www.rbi.org.in

 

Can an NRI inherit property?

An NRI can inherit any immovable property in India, whether it is residential or commercial. An NRI is also permitted to inherit property from another NRI or resident of India. However, the RBI’s permission is essential if the property is inherited by a citizen of a foreign state and is a resident outside India.

Can an NRI gift a property?

An NRI can gift residential and commercial property to a person residing in India, or another NRI. Gifts received from relatives are not taxed but at the time of registration, one has to pay the prevalent stamp duty and registration charges. If the gift is received on the occasion of marriage or from a registered trust, it is exempt from tax. The term ‘relative’ is defined in the Income Tax Act.

How must funds be repatriated from real estate investment, both for rental income and proceeds on sale?

There is no restriction on NRIs for repatriating rental income or even property sale proceeds, as long as the total proceeds are within the set limit of $1 million in a fiscal year.

The conditions are:

  • The property being sold was acquired as per the foreign exchange regulations applicable during that period.
  • The amount being repatriated cannot exceed the cost of the sale proceeds from the transaction.
  • The sale proceeds from a maximum of two residential properties can be repatriated.
  • The maximum amount of repatriated funds from a Non-Resident Ordinary (NRO) account is capped at $1 million per fiscal year.
  • Funds can be repatriated only after settling all the applicable taxes and other charges.

How does one verify whether an Indian property is legally compliant in all respects?

It is obviously very important for an NRI to pay attention to factors like the legitimacy of land, compliances to be followed during construction, environmental clearances, etc. at the time of a property purchase. Before buying such a property, the NRI should consult a lawyer to examine all the legal documents and verify their authenticity. They must also check whether the project is registered under the respective state RERA and whether or not it is fully RERA-compliant.

What is the jurisdiction of any dispute related to property investment in India?

It is not advisable for NRIs to file property dispute cases anywhere else other than the jurisdiction where the property is located. Delays in the construction process beyond the extension period mentioned in the agreement fall under the purview of consumer courts concerning ‘deficiency in rendering of service’ under the Consumer Protection Act of 1986.

How can NRI make payments for buying a property?

NRIs can make payments out of-

  • Funds remitted to India through regular banking channels.
  • Funds held in NRE/NRO account maintained in India.
  • No payment can be made outside India.
  • No payment can be made through traveller’s cheque or by foreign currency notes.

Do NRI's require permission of Reserve Bank to acquire immovable property in India?

No NRI’s do not require any permission to acquire any immovable property in India other than agricultural / plantation property or a farm house.

Do NRI's require permission of Reserve Bank to transfer immovable property in India?

No NRI’s do not require any permission to transfer any immovable property in India. Permission is required only in the case of transferring of agricultural or plantation property or farm house to another citizen of India NRI or PIO.

Can NRI's/PIO's rent out the properties (residential/commercial) 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 is eligible for repatriation

Can NRIs obtain loans for acquisition of a house/flat for residential purpose from 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., to grant housing loans to NRI’s for acquisition of a house/flat for self-occupation subject to certain conditions. The purpose of 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 remittances or out of funds held in the investor’s NRE/FCNR/NRO Accounts.

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