A NRI is a person resident outside India who is either a citizen of India or a person of Indian origin. A NRI is an Indian Citizen who has migrated to another Country. For all official purpose the Government of India considers Indian National away from India for more than 182 days, in a year.
A person of Indian origin means an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan) who:
i) held an Indian Passport at any time, or
ii) who or whose father or paternal grand father was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955.
There are no restrictions on the numbers of Residential/Commercial Properties (other than agricultural land/farm house/plantation) that can be purchased.
No. All Indian citizens are entitled to buy property in India, irrespective of their residential status.
The purchase consideration should be met either out of inward remittance in foreign exchange through normal banking channels, or out of funds from NRE/FCNR(B)/NRO accounts maintained with banks in India.
Yes, NRIs and PIOs can freely acquire immovable property in India by way of gift either from
(i) person resident in India
However the property can only be commercial or residential.
Again NRIs and PIOs may gift residential/ commercial property to
(i) person resident in India
(iv) Foreign national of non Indian origin – with approval of RBI
Currently there is no lock in period.
Yes. Reserve Bank of India has granted general permission for sale of such property to the following categories:-
-To a NRI
-To a PIO (If the seller is a PIO, then a prior approval is required from RBI)
-To a person Resident of India
Yes the sale proceeds can be remitted/repatriated out of India
In the event property acquired out of foreign exchange source i.e. remittance through normal banking channels/ debit to NRE/ FCNR(B) accounts, the amounts to be repatriated should not exceed the amount paid for such property from such source. However, repatriation of sale proceeds purchased out of foreign exchange is restricted to not more that two residential properties, in a block of one year, with a facility of crediting the Capital gain to the NRO account.
Again in the event the property was acquired out of Rupee source, an amount not exceeding USD one million, per financial year, subject to tax compliance, out of balance held in NRO account, may be remitted/repatriated.
Yes, during repatriation Capital Gains (Long Term/Short Term) as applicable will be attracted.
Long Term Capital Gains: For properties held for 36 months or more are termed as
Long Term Capital Assets, and currently attracts a rate of 22.6%
(Fin. Year: 2007-08)
Short Term Capital Gains: For properties held for less than 36 months are termed as
Short Term Capital Assets, and currently attracts a rate of 33.9%
Repatriation of income derived out of letting of immovable property is permissible. NRI/PIO can rent out the property without approval of Reserve Bank. Rent received can be credited to NRO/NRE account or remitted abroad. Powers have been delegated to the Authorised Dealers to allow repatriation of current income like rent, interest, dividend etc. of NRI/PIO who do not maintain an NRO account in based on an appropriate certification by Chartered Accountant, certifying that the amount proposed to be remitted is eligible for remittance and that applicable taxes have been paid/ provided for.
- To Sell – Power of attorney to sell a property
- To Recover Debt – To recover property related loans/debts.
- Power of Attorney by a firm
- Power of Attorney by trustee
- GPA (General Power of Attorney) to a manager of the estate
- Specifica Power of Attorney by the Owner to the Builder to get Building Plans Sanctioned, Clear Dues….Get Permissions etc
In the event of any income from the property, Income Tax liable is more than what an individual is supposed to pay. Taxes and all charges are administered as per the Corporate Tax laws.
In the event of registry done in the name of a female, the applicable charge is equivalent to 5% of circle rate value. 6% of circle rate value in case of combined (male & female) and 7% for individual (male) and/or corporate registry.
The advantage is that the property can be transferred along with the company without any payment duty or securing any Income Tax Clearance Certificate under 34-A and 37-I.
1. Registered lease agreement in cases where the lease is from year to year or exceeding one year rent or reserving yearly rent. In such cases the instrument must be executed by both the lessor and the lessee.
2. Oral agreement followed by delivery of possession in other cases.
If a lease agreement does not contain an escalation clause, can the lease amount still be escalated upon renewal?
There is a provision in the Rent Control Act that entitles the lessor to an escalation of minimum 10% on previous amount after every 3 years. The escalation percentage may vary subject to lease agreement and terms agreed upon mutually between lessor and lessee.
Lease is a legal binding contract between the lessor and the lessee for possession and enjoyment of the profits of land/flat/shop on one side and recompense by rent or other consideration on another.
The practice of opening offices in residential areas is illegal and punishable. However, in the usual course of business, service based industries are allowed to open their offices in such residential colonies and normally utilize (to the tune of) 25% of ground floor area. But any complaint by owner/residents/RWA is held material for them to vacate the premises.
Keep the loan period constant and calculate the total amount paid for the home through the different loan options available.
The amount of home loans granted by various financial institutions generally is between 2 lakhs to 15 crores and between 70% to 100% (under special schemes) of the purchase price.
EMI – Equated Monthly Installments, is the amount payable to the Housing Finance Institution every month, till the loan is paid back in full, comprising of portion of interest and principal. EMI is to be paid every month through post dated cheques or through direct deductions from the salary.
- Pre-payment Penalties: When a loan is paid back before the end of the agreed duration, a penalty is charged by some banks/companies, which is usually between 1% and 2% of the amount being pre-paid.
- Commitment Fees: Some institutions levy a commitment fee in case the loan is not availed of within a stipulated period of time after it is processed and sanctioned.
- Miscellaneous Costs: It is quite possible that some lenders may levy a documentation or consultant charges.
- Registration of mortgage deed.
The main security for a home loan is the first mortgage of the property to be financed, normally by way of deposit of title deeds and /or such other collateral security as may be necessary. In addition interim security may be required, if the property is under construction. The documents of title will be kept in the safe custody of the Home Finance Companies until repayment of the loan.
Monthly Rest : the interest is calculated on the outstanding principal loan at the beginning of every month.
Annual Rest : the interest is calculated on the outstanding principal loan at the beginning of every year.
- Fixed rate: where the rate of interest charged by the HFC on the loan is constant over the tenure of the loan.
- Variable rate : Commonly known as Floating Rate, where the rate of interest charged by the Home Finance Companies on the loan keeps changing with respect to the rates in the market over the tenure of the loan.
Leasehold Property is property leased to a lessee for a stipulated period. The Lessee pays lease premium and annual lease amount as fixed and mutually agreed by the Lessor and lessee. The land ownership rights remain with the Lessor and a prior sale-permission is normally required if you plan to transfer the property.
The valuation process evaluates the market value of the property. Demand and supply forces operating in the market, as well as other factors like type of property, quality of construction, its location, the local infrastructure available, maintenance, are all taken into consideration before the market value is decided.
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.
An agreement of sale, coupled with actual possession of the property would be considered as a conclusion of the sale. Usually, the entire amount is paid at the time of handing over possession.
If the transfer takes place within three years of purchase, the income tax exemption under Section 54F of the Income Tax Act does not hold good.
When ownership rights for a piece of property are given to the purchaser for a price, that property is referred to as Freehold Property. Unlike in the case of leasehold property, no annual lease charges need to be paid and the freehold property can be registered and/or transferred in parts.
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.
The price that a property can command in the open market is known as its market value. Stamp duty is based on the market value or the agreement value of the property, whichever is greater.