• Q. What's the definition of an NRI?
  • An Indian Citizen who stays abroad for employment/ carrying on business or vacation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a non-resident. (Persons posted in U.N. organisations and officials deputed abroad by Central/ State Government and Public Sector Undertakings on temporary assignments are also treated as non-resident) Non-resident foreign citizens of Indian Origin are treated on par with non-resident Indian citizens.
• Q. Can I buy property?
  • Yes, you can buy residential or commercial immoveable property if you are an NRI, holding an Indian passport without prior permission of Reserve Bank of India. The purchase may be paid for either by remittance of funds from abroad through normal banking channels or out of NRE / FCNR / NRO account. However, for commercial property, a declaration on form IPI 7 for acquisition of commercial property for carrying on any industrial, commercial or trading activity by their proprietary / partnership firm in India is required to be filed with RBI within 90 days from date of purchase
• Q. Can I rent out my property? Can I repatriate the rent?
  • Yes, you may rent out the property. However, income accruing by way of rent from the properties purchased or acquired by inheritance will not be allowed to be repatriated abroad even if the purchase consideration was met out of NRE / FCNR account.
• Q. Can I sell it? Can I repatriate the proceeds?
  • Yes, you may sell it. If you are an NRI holding an Indian passport or a foreign citizen of Indian origin, you will be allowed to repatriate your original investment in equivalent foreign exchange in residential/commercial properties after obtaining prior approval subject to a maximum of two houses under certain conditions.
    
    Do keep in mind that no transfer of any immovable property exceeding the specified value for different cities can be effected unless particulars are filed with the appropriate authority of the Income Tax department within 15 days of signing the agreement.
    
    In addition, as per a new scheme of capital gains tax with effect from 1993-94, instead of deducting from the proceeds of transfer, actual amount spent to acquire the asset or the amount spent on improvement or addition thereto, the inflation index adjusted cost will be deducted.
    
    Brokerage, legal fees and other expenses incurred in selling the property would be allowed as a deduction from the taxable capital gains.
• Q. What are the legal safeguards I must ensure?
  • While there are many, many checks and procedures to be followed while acquiring a property, one caveat does not change - buy from a well-known developer of repute. Use the services of a competent property lawyer.
    
    Most reputed property developers have a good understanding of the legal requirements and even have an NRI cell to guide you and answer all queries.
    Given below are some guidelines:
    
    1. Scrutinise all original payment documents.
    
    2. Refer the documents to a reliable lawyer who may certify that clear title can be passed on to the buyer.
    
    3. Obtain 'No-encumbrance certificate' for the past 30 years to ensure that no mortgage has been outstanding on the property to be purchased.
    
    4. Obtain required clearance under the Urban Land (Ceiling and Regulation) Act.
    
    5. In the event of purchase from a third party eg, a real estate developer, ensure whether he is the absolute owner or holds a registered power of attorney to sell the property. You will not go wrong if you buy from an established and reputed developer.
    
    6. Use the services of a registered appraiser to ensure that the price quoted is as per the correct market value.
    
    On Agreement and Registration practices:
    1. An agreement on the price to be agreed and payment terms especially on payment of last instalment on possession, and the registration.
    
    2. Sale Deed or Agreement to sell must be executed by the seller and buyer. This should include full details and origin to the title to the property, proper identification to the property by neighbouring survey numbers, payment terms and payments made so far and cheque/ draft references. Check the clauses!
    
    3. Buyer should ensure that their right is not negated in the sale deed through undertaking additional construction in violation of the Apartment Ownership Act if the municipal bye-laws permit it at a future date.
    
    4. Stamp duty differs according to the state involved. Ensure that the prevailing stamp duty is remitted.
    
    5. The seller on completion of the project should execute the transfer of title to the buyer by getting it registered with the local sub-registrar of properties under whose jurisdiction the property is located.
    
    6. While buyer's presence is not necessary (he can authorise his representative to execute the document), the seller (not be the real estate promoter) must be present and transfer the title by signing the transfer deeds and all appropriate documents.
    
    7. The sale deed prepared earlier is only an initial contract. Before registration, the final deed is prepared on stamp papers of appropriate value which will be the prevailing rate of stamp duty in the respective states. This set of documents should be executed by the seller.
    
    8. Note that under Section 230 A of the income Tax act, 1961 all sale deeds showing the prescribed value and above should be cleared by the Income Tax officer. Only then, the Registrar will register the property.
    
    9. Irrespective of the value shown in the document, the Sub-Registrar will determine the market value of the property and the stamp duty.
    
    10. In case of purchase of apartments, proportionate share of the land on which the apartments are built are registered.
    
    11. The price indicated by the promoter should be firm. If the promoter desires for escalation, it should be done in accordance with the procedure followed by the Government undertakings and should form part of the Agreement.
    
    12. The Agreement should accompany plans, drawings and specifications of each item of work.
    
    13. The Agreement should specify the completion date and the terms of compensation in the event of delay in delivering possession of the apartment.
• Q. What are my means of redress?
  • 1. In spite of all efforts if a buyer gets duped, a complaint may be lodged under the Consumer Protection act.1986, which is a Central Act. Representation can also be made to the Monopolies and Restrictive Trade Practices Commission (MRTPC ) for issuing instructions for indulging in unfair trade practices
    
    2. A number of states and union territories have established consumer protection councils. The redress machinery, which is quasi-judicial, has also been set-up in a number of states.