1.

Is it compulsory to Register Sale Agreements/ Documents of ownership flats?

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. (iv) It does not really matter whether conveyance has been granted to the society or not since it is only a change of membership which takes place in a society. Thus the answer to (c) above is relevant even where no conveyance has been granted in favour of a society. (v) The Registrar of Co-operative Societies has issued some time back a circular to societies whereby he has stated that all documents for transfer of flats be registered. However, under section 41 of the Maharashtra Co-operative Societies Act registration is not compulsory in case of sale of flats in societies but in view of the aforesaid circular some societies do insist on registration. (vi) The Bombay High Court has held that transfer of shares in a co-operative society is in fact transfer of immovable property for the purpose of stamp duty. However, section 41 of the Maharashtra Co-operative Societies Act is still valid and two issues involved here are different. Section 41 deals specifically with regard to the registration issue as stated above.

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2.

What are the formalities required to be completed by foreign citizens of Indian origin for purchasing residential immovable property in India under the general permission?

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 alongwith a certified copy of the document evidencing the transaction and bank certificate regarding the consideration paid.

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3.

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 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.

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4.

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

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.

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5.

Are any conditions required to be fulfilled if repatriation of sale proceeds is desired?

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.

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6.

What is the procedure for seeking such repatriation?

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.

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7.

Can foreign citizens of Indian origin acquire or dispose of residential property by way of gift?

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.

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8.

Can immovable property held in India, be transferred by way of gift to relatives/registered charitable trusts/organisations in India?

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.

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 9.

Can foreign citizens of Indian origin acquire commercial properties in India?

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.

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10. 

Can they dispose of such properties?

Yes.

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11. 

Can sale proceeds of such property be remitted out of India?

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.

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 12.

Who is the authority who would know the market value of a property?

The sub-registrar of the area in whose jurisdiction the property is located is the appropriate authority who knows the market value of the property.

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 13.

Who is liable to pay stamp duty, the buyer or the seller?

Primarily, the obligation for payment of Stamp Duty is that of the purchaser -unless it is agreed between the seller and purchaser to otherwise share or pay the Stamp Duty. The liability of paying stamp duty is that of the buyer unless there is an agreement to the contrary.

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 14.

Is Stamp Duty applicable to Agreement for Sale / Memorandum of Sale?

Yes. Stamp Duty is applicable on Agreement for Sale / Memorandum of Sale for immovable property, as prescribed in the Stamp Act of each State.

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 15.

Is it compulsory to register the Agreement for Sale / Memorandum of Sale?

No. It is not compulsory to register Agreement for Sale or Memorandum of Sale.

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 16.

Does the sale of house property attract Capital Gains?

Yes, the sale of house property attracts Capital Gains.

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