FAQ

Lease is defined under Section 105 of The Transfer of Property Act, 1882 and a lease of immovable property is a transfer of a right to enjoy such property for a certain time or in perpetuity on consideration to be rendered periodically or on specified occasions, while a license is defined in Section 52 of the Indian Easement Act,1882 and it does not create any interest in the premises in favour of the Licensee excepting a mere right to use and occupy the premises for a limited duration. Both documents have now to be registered. A lease deed is required to be stamped and registered.

However, the stamp duty payable on lease is more than on Leave and License for a period up to three years. For a period exceeding three years the stamp duty is same for both agreements.
The implications of entering into a lease agreement would be:

i) That stamp duty would have to be paid
ii) That the document would have to be registered
iii) That Municipal tax may go up
iv) Of course, Income-tax would have to be paid on your income; and
v) The question of Wealth-tax would have to be considered.

One property is exempt from Wealth-tax. However, if you have any other property, this implication would have to be considered.

a) Purchase from builders
b) Resale flats – Society not registered
c) Resale in a Registered Co-op Society (Conveyance in favour of Society completed)
d) Resale in a Registered Co-op Society (Conveyance not completed through administration by Society)

Answer –
(i) Registration of agreement for sale/documents of ownership flats when ownership flats are purchased from builders, one should register such agreements with the Sub-Registrar.
(ii) In case of resale of flats in a society which is not registered, the registration would be required.
(iii) In case of resale of flats in a registered Co-operative Society no registration is compulsory as per section 41 of the Maharashtra Co-operative Societies Act, 1960.

However, some societies do insist that such documents be registered.

Below are the legal implications regarding: i) Title – and how is this established ii) Gift tax, is it livable and if so, when?

If one has gifted a flat to his daughter one should have the gift deed drawn out which should be witnessed by two persons. In case of both, the donor and the donee, it is preferable to register the said gift deed even if the flat is in a co-operative society. Stamp duty would have to be paid on the gift deed which would be the same as in case of the sale of a flat. However, there is no gift tax applicable. The gift deed would be the title document indicating the gift to the daughter along with the share certificate if it is in a co-operative society.

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 transaction and bank certificate regarding the consideration paid.

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 necessary permission for remittance of sale proceeds should be made in form IPI 8 to the Central Office of Reserve Bank at Mumbai within 90 days of the sale of the property.

Yes, General permission has been granted by Reserve Bank to non-resident persons (foreign citizens) of Indian origin to transfer by way of gift immovable property held by them in India to relatives and charitable trusts/organisations subject to the condition that the provisions of any other law, including Foreign Contribution (Regulation) Act, 1976, as applicable, are duly complied with.

Yes

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.