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FAQ

How many square feet of land is one cent ? / One cent is How many square feet?

1 Cent is 435.5 sqft.

What is meant by valuation of property?

Ans

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.

How does property valuation help?
Ans

Typically, if a real estate agent is asked to judge the value of a piece of property, he would do so based on information of recent sales or purchases of similar properties in that area. Though this may give a fair idea of the property’s market value, an official property valuation would carry more weight. E.g. if you need to use this piece of property as a security against a loan, the bank’s loan approval process would be faster and smoother if the property is certified by an official valuer. Many banks now insist on valuation certificates before issuing loans using properties as security. The value thus certified may also have chances of getting a higher amount of loan sanctioned. Another benefit of official valuation is that it is a useful negotiating tool when selling the property. Such certification also becomes essential in situations where the correct value of the property has a legal bearing-such as, a will statement, insurance papers, business balance sheets etc.

What is the meaning of a property’s market value? Is stamp duty payable on market value?
Ans

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.

What does the term ‘Leasehold Property’ mean?
Ans

A property (plot/ built up) in which perpetual leasehold have been granted by the title paramount in favour of the lessee. The title paramount i.e. president of India in these kinds of properties acts through DDA, L & DO. Leasehold properties are not freely transferable. depending upon the covenants pf. the lease deed prior permission of the lessor (DDA/LDO) is required to transfer the property. One is required to pay charges such as 50 & of the unearned increase and conveyance.
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 ‘Freehold Property’ mean?
Ans

A property where title paramount has conveyed the property in favour of the purchaser by conveyance/ sale deed with no restriction on the right of the holder of the property to further transfer the property. Record of ownership of the freehold property can be ascertained from the office of the sub-registrar. It can be transferred by registration of sale deed.
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 part(s).

Is there any benefits in converting to a freehold property from a leasehold one?
Ans

There are several benefits: if you convert the property to a freehold property, you become a full-fledged owner by getting the sale deed and having it registered. A freehold property has better marketability and can be sold, mortgaged or kept for standing security, which cannot be done with leasehold property.

Is there any income tax considerations while transferring newly acquired property?
Ans

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.

What constitutes conclusion of sale of a property?
Ans

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.

 

How a NRI or PIO can buy property/land in India?

Ans

The law has come a long way since the days of the Fera (Foreign Exchange Regulation Act) regime, when buying or selling of immovable property was governed by the citizenship of a person.Under Fema (Foreign Exchange Management Act), the thrust is on residential status. But before we go into the details of the law, let’s get the definitions straight. An NRI is an Indian citizen residing outside India. A citizen of another country is a PIO (person of Indian origin) if he has held an Indian passport at any time or if he, his father or his grandfather has been a citizen of India. A citizen of Pakistan, Bangladesh, Sri Lanka [ Images ], Afghanistan, China, Iran, Nepal or Bhutan is not regarded as a PIO.

With the emphasis on residential status, a foreign citizen who is a resident of India can buy and sell properties without prior approval from the Reserve Bank of India [ Get Quote ], subject to a general ban on citizens of the eight countries mentioned above and restrictions on buying certain properties.

A foreign citizen of non-Indian origin cannot acquire agriculture land/farm house/plantation property in India without the prior approval of the RBI, whereas a foreign citizen of Indian origin can acquire such properties without the prior approval of the RBI but only by way of inheritance. Leasing of immovable property for a period of five years or less is freely permitted.

The RBI does not determine the residential status of a person for the purpose of acquisition of immovable property in India. Under Fema regulations, residential status is determined by operation of law. The onus is on the individual to prove his residential status, if questioned by any other authority.

Acquisition by way of purchase

A general permission is available to NRIs or PIO to purchase only residential/ commercial property in India. There is no restriction on the number of residential/commercial properties that an NRI or a PIO can buy. The name of a foreign national of non-Indian origin cannot be added as a second holder of a residential/commercial property purchased by an NRI or a PIO.

A foreign national of non-Indian origin, resident outside India, cannot acquire any immovable property in India by way of purchase without the RBI’s nod. However, a foreign national of non-Indian origin, including a citizen of the eight countries mentioned above, may acquire only residential accommodation on lease, for not more than five years.

He does not require the RBI’s permission for this. A person resident outside India (that is, an NRI, a PIO or a foreign national of non-Indian origin) cannot acquire agricultural land/plantation/farm house in India by way of purchase.

Acquisition by way of gift

An NRI or a PIO may acquire residential/commercial property by way of gift from a resident of India, an NRI or a PIO. However, a foreign national of non-Indian origin resident outside India cannot acquire residential/commercial property in India by way of gift. A person resident outside India cannot acquire agricultural land/plantation/farm house in India by way of gift.

Acquisition by way of inheritance. A person resident outside India can hold immovable property in India acquired by way of inheritance from a person resident in India. Further, with the approval of the RBI, he may hold immovable property in India acquired through inheritance from a person resident outside India, provided the bequeathor had acquired the property in accordance with Fema or the foreign exchange law in force at the time of acquisition.

Sale of immovable property

An NRI can sell residential/commercial property in India to a person resident in India, an NRI or a PIO. However, a PIO can sell residential/commercial property in India only to a resident of India. He would need prior approval of the RBI for sale of residential/commercial property in India to an NRI or a PIO.

A foreign national of non-Indian origin whether resident in India or outside India would require prior approval of the RBI for sale of residential property in India acquired with the specific permission of the RBI to a person resident in India or outside India.

An NRI or a PIO may sell his agricultural land/plantation/ farm house in India to an Indian citizen resident in India. However, a foreign national of non-Indian origin, resident outside India, would require prior approval of the RBI to sell agricultural land/plantation/farm house acquired in India.

Gift of immovable property in India. An NRI or a PIO may gift residential/commercial property in India to a person resident in India, an NRI or a PIO. Further, an NRI or a PIO may gift agricultural land/plantation/farm house in India to an Indian citizen resident in India.

However, a foreign national of non-Indian origin resident outside India would need prior approval of the RBI to gift agricultural land/plantation/ farm house acquired by him in India.

Acquisition of immovable property for carrying on a permitted activity in India

A person resident outside India who has established a liaison office in India in accordance with Fera/Fema regulations cannot purchase immovable property in India. Practically, all liaison offices in India acquire premises on lease for not more than five years for which no permission is required from the RBI.

However, a person resident outside India who has established a branch office or other place of business in India in accordance with Fera/Fema regulations can purchase immovable property in India provided it is necessary for, or incidental to, carrying on the activity he is engaged in and all applicable laws have been complied with.

For details on other related issues, you may approach the chief general manager, RBI, Foreign Investment Division, Central Office, Mumbai

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