FAQ's
FSI stands for Floor Space Index or it is also referred to as FAR which stands for Floor Area Ratio. It is the ratio of a building’s total floor area (gross floor area) to the size of the piece of land upon which it is built. The terms can also refer to limits imposed on such a ratio.
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. 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.
Reserve Bank permits Indian firms/companies to grant housing loans to their employees deputed abroad and holding Indian passports subject to certain conditions.
Regarding the authenticity of documents, you have to take the help of an advocate for verifications.
Yes, POA can be either revocable or irrevocable, depending on what sort of a POA one has made.
The 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 ready reckoner (a government published guide on property rates in all areas) value whichever is higher.
These expenses are allowable expenses from the full value of consideration of the sale of house property.
A person may claim deduction from income (under the head “house property”) for interest payable in India on housing loan, if such loan is taken for acquiring, constructing, reconstructing, repairing or renovating a property. However, if the property is used for business carried on by the assessee, he may claim deduction for such interest from income under the head “business or profession”. In both cases, the property would include residential as well as commercial property.
Rule 34 of the Development Control Regulations for Greater Bombay, 1991 defines TDR which stands for Transferable Development Rights as stated under:
‘In certain circumstances, the development potential of a plot of land may be separated from the land itself and may be made available to the owner of the land in the form of Transferable Development Rights. These rights may be made available and be subject to the Regulations in Appendix VII hereto. Appendix VII lays down the rules for the grant of Transferable Development Rights to owners/developers and conditions for grant of such rights:
- The owner (or lessee) of a plot of land which is reserved for a public purpose in the development plan and for additional amenities deemed to be reservations provided in accordance with these Regulations excepting under certain conditions shall be eligible for the award of TDR in the form of Floor Space Index (FSI) to the extent and on the following conditions set out below. Such awards will entitle the owner of the land to FSI in the form of a Development Rights Certificate (DRC) which he may use himself or transfer to any other person.
- Subject to Reg.1, where a plot of land is reserved for any purpose specified in S.22 of Maharashtra Regional and Town Planning Act, 1966, the owner would be eligible for DR’s to the extent stipulated in Rules 5 & 6 in this Appendix after the said land is surrendered free of cost or after completion of development.
- TDR will be available only for prospective development of reservations.
- DRC will be issued by the Commissioner himself giving details of FSI credit.
- The built up area for the purpose of FSI shall be equal to the gross area of the reserved plot to be surrendered.
- When the owner or lessee also develops or constructs the amenity on the surrendered plot at his cost, he may be granted a further DR in the form of FSI equal to the area of the construction/ development done by him.
Yes, you need permission of the Society for keeping a Paying Guest. It depends on the Society bye laws and rules. Some Societies keep asking for extra outgoings by way of Non-Occupancy charges.
On the proposed sale of your flat you may purchase another flat within two years of the date of sale of the original flat. If you have invested the entire amount of capital gain irrespective of your area of the flat, you would not have to pay any capital gains tax.
Yes, it is safe to give ownership flat for leave and licence provided an agreement has been entered into to that effect and the same leave and licence agreement has been registered with the Competent Authority under the Maharashtra Rent Control Act, 1999.
Yes, Reserve Bank has granted general permission for sale of such property. However, where 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 balances in NRE/FCNR accounts.
Applications for repatriation of sale proceeds are considered provided the sale takes place after three years from the date of final purchase deed or from the date of payment of final instalment of consideration amount, whichever is later.
Yes, Reserve Bank has granted general permission to foreign citizens 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, under the general permission granted by Reserve Bank properties other than agricultural land/farm house/plantation property can be acquired by foreign citizens of Indian origin provided the purchase consideration is met either out of inward remittances in foreign exchange through normal banking channels or out of funds from the purchasers’ 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.
Yes. Repatriation of original investment in respect of properties purchased by foreign citizens 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 instalment of consideration amount, whichever is later. Applications for the purpose are required to be made to the Central Office of Reserve Bank within 90 days of the sale of property in form IPI 8.
Reserve Bank has granted general permission to certain financial institutions providing housing finance e.g. HDFC, LIC Housing Finance Ltd., etc., and authorised 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 remittances or out of funds held in the investors‘ NRE/FCNR/NRO accounts.
While buying a flat from a builder in a building under construction, check the following:
- The builder has approval on the building plan along with the number of floors
- Approval on the floor, on which your flat is situated
- Verify the documents for the ownership of the construction site. In case, the builder is not the owner, verify the written agreement with the landlord
- Check the title of the land ownership with the help of an advocate
- Check the building bylaws as applicable in that area, and ensure that the builder is doing the construction without any violation of front setbacks, side setbacks, height etc.
- Check specifications given in the agreement to sell off the Sale Brochure
- Check the reputation of the builder
- The builder has obtained Urban Land Ceiling NOC (if applicable) and NOC from Water & Electricity Authorities
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 no lessor/lessee involved.
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.
Carpet Area: This is the area of the apartment/building that does not include the area of the walls.
Built-Up Area: This is the area of the apartment/building, including the area of the walls.
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 for multi-dwelling units.
You are liable to pay Tax on profit arising from sale of a house property under the head Capital Gain.
No, it is not necessary that the loan should be taken only from housing finance companies. One may take a loan from any company or person, even from family members.