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No registration fee, stamp duty for new apartments in Tamil Nadu

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In a relief for homebuyers, the registration department in Tamil Nadu has clarified that ready to occupy new apartments and buildings need not have to pay stamp duty and registration fee.

The move comes in the wake of some sub-registrar offices demanding to register the apartments attracting stamp duty and registration fee.

However, it is applicable only on the first sale of the property.

Inspector general of registration on May 11 issued an order that confines Undivided Share (UDS) of a property under the bracket of stamp duty and registration fee.

“If a document is presented for registration for first sale of undivided share of land, the registering officers are instructed not to demand or insist on inclusion of building in the subject matter of sale document for the sole reason that completion certificate has been issued by the competent authority to the project,” a communication from the inspector general of registration to sub-registrars said.

This would help homebuyers not pay the combined 11% stamp duty and registration fee for new apartments.

Builders Association of India state treasurer S Ramaprabhu said that the order paves way for subjecting only UDS for stamp duty and registration fee.

“For instance, a new flat costing Rs 60 lakh, of which UDS is Rs 20 lakh and rest Rs 40 lakh is the price of the apartment. Homebuyers need not shell out stamp duty and registration fee on the building. It is a welcome move for those buying properties in completed projects because it does not attract GST,” he added.

What is the jurisdiction of any dispute related to property investment in India?

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It is not advisable for NRIs to file property dispute cases anywhere else other than the jurisdiction where the property is located. Only the court in that jurisdiction can try a property-related case.

Delays in the construction process beyond the extension period mentioned in the agreement fall under the purview of consumer courts under ‘deficiency in rendering of service’ in the Consumer Protection Act of 1986 if the project is not registered under state RERA.

If the project is registered under RERA, buyers can file a complaint under Section 31 of the regulation with the appointed regulatory authority within the respective state.

Interestingly, there may soon be a law in place in the state of Punjab to protect NRIs against property-related frauds. The State government is planning to bring the NRI Property Safeguards Act to resolve issues of NRI buyers effectively and transparently.

An ombudsman for resolving issues would also be set up under the law. If this happens, it would indeed be a worthy precedent for other states to follow.

How does one verify whether an Indian property is legally compliant in all respects?

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It is important for an NRI to pay attention to factors like the legitimacy of land, compliances to be followed during construction, environmental clearances, etc., at the time of a property purchase. As real estate is a state subject, laws may differ from state to state and there is, therefore, no one-size-fits-all response.

Before buying such a property, the NRI should ideally consult a lawyer to examine all the legal documents and verify their authenticity. They must also check whether the project is registered under the respective state RERA and whether or not it is fully RERA-compliant. However, many Indian states and Union Territories still do not have a functional RERA website, and this is where the services of a reputed real estate consultancy can be invaluable to save on time and effort, and ensure that all the boxes are ticked.

How to repatriate funds from real estate investment, both for rental income and proceeds on sale?

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The laws are quite lenient but have some provisos.

There is no restriction on NRIs for repatriating rental income or even property sale proceeds (other than agricultural land, a farmhouse and plantation property) as long as the total proceeds are within the set limit of USD1 million in a fiscal year.

The conditions are:

The property being sold was acquired as per the foreign exchange regulations applicable during that period.

– The amount being repatriated cannot exceed the cost of the sale proceeds from the transaction.

– The sale proceeds from a maximum of two residential properties can be repatriated.

– The maximum amount of repatriated funds from a Non-Resident Ordinary (NRO) account is capped at $1 million per fiscal year.

– Funds can be repatriated only after settling all the applicable taxes and other charges.

If the property was purchased with money received from inward remittance or debit to NRE/FCNR/NRO account, the entire principal amount can be repatriated outside India immediately while the balance must be deposited in an NRO account.

To start the repatriation process, the NRI must get a certificate from a Chartered Accountant (CA) in India, issued in Form 15CB. The form can be downloaded easily from the Indian government tax website. This form verifies that the money acquired was via legal channels and all due taxes have been paid. The CA verifies and signs the form.

The next step is to fill Form 15CA which can also be downloaded from the same website. The form must be filled and submitted online, after which a system acknowledgement number is automatically generated and displayed. The NRI must print out the filled undertaking of Form 15CA displaying the system-generated acknowledgement number, and sign it.

The final step is to take the signed undertaking along with the CA certificate on Form 15CB to the bank where one has an NRO account. The concerned bank will check the forms and transfer the money abroad (up to $1 million in an FY). Apart from these forms, the bank will also ask for a copy of the sale document of the property. If the property has been inherited, the bank will ask for the Will copy, legal heir certificate, and death certificate of the person on whose death the property was inherited.

Can a property be gifted, and what are the statutory charges levied on a gifted property?

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An NRI can gift residential and commercial property to a person resident in India or to another NRI. However, if the property is agricultural land, plantation property or farm house, it can only be gifted to an Indian citizen residing in India.

Gifts received from relatives (as defined under the Income Tax Act) are not taxable,
But when registering, one must pay the prevailing stamp duty and registration fees. Relatives include a wife, brother or sister, wife’s brother or sister, brother or sister of one of the parents, and any descendant or descendant of self or wife.
If the gift is received at the wedding or from a registered trust, it is exempt from tax.

Some NRIs are more interested in investing in Indian real estate through companies they have created on foreign soil, or they may work in a foreign company that is interested in making a footprint in India.

Know your EMI Holiday

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Take advantage of the moratorium period: Announcing major relief to home loan borrowers in the aftermath of the Covid-19, the RBI on March 27, 2020, deferred EMI payments under a three-month moratorium period apart from bringing down the repo rate to a record low of 4.4%. The Reserve Bank of India announced a major relief for home borrowers after Kovid-19, and on March 27, 2020, the EMI deferred payments for a period of three months, except for the reduction of the Remo rate by one month. The record low is 4.4%. Because the the moratorium is from March 1 to May 31, you have two months off.

However, take note of the many catches at this opportunity. First of all, this is not an EMI holiday – you have to pay EMI with interest later. Delayed payments in your credit history are not classified as a default link, but you have two months of relaxation from the Reserve Bank.

Additionally, whether the benefit extends to you is at the bank’s discretion as an invitation to your lender and as an interest charge for late EMI payments.

Suppose your home loan EMI is Rs 40,000. Up on non-payment, this amount will be added to the loan principal. In the next month, the interest will be computed on the loan outstanding, along with Rs 40,000.

For the borrower who has been laid off, not taking this option is not actually an option. “While availing of the moratorium will cost them additional interest cost, it will give them at least a two month window to get a job or arrange funds from other sources, without hurting their credit score,” says Chaudhary.

Can an NRI use a Will to bequeath property in India to someone else — either another NRI or a resident Indian?

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NRIs can of course assign assets to their legal heir / s or any other option of their choice. An NRI is any immovable property in India, be it residential or commercial – and even agricultural land or farm house (which they are otherwise not entitled to purchase).

An NRI is also free to obtain assets from another NRI or resident in India. However, the Reserve Bank’s permission is required if the property is acquired by a citizen of a foreign state and resident outside India.

Credai seeks single window clearance, reduction in stamp duty

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The Confederation of Real Estate Developers Associations of India (Credai) has requested the Government of Tamil Nadu to launch a single window system to build approvals and reduce stamp fees.
In a letter to Tamilnadu Chief Minister and Deputy Chief Minister, Credai Tamil Nadu President S. Sreedharan said the state government should implement the long-awaited single window clearance. He said this would lead to the dynamic and vibrant growth of industry in the state.
The single window system will throw entire building approvals online, including all planning applications, including planning permission and completion certificates, at the click of a button.

Credai Chennai chapter president W S Habib said the government should take immediate steps to reduce stamp duty.

“With amendments to the Tamil Nadu Combined Development and Building Rules, we expect that further measures such as reduction in stamp duty on a par with other states will benefit the revival and robust growth of real estate of the state,” he said.


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