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FAQs

If you are an NRI and wish to invest in residential or commercial property in
PCMC and Pune, refer to the following FAQs.

Who is a NRI under the provisions of Foreign Exchange Management Act?

Generally, an Indian Citizen who stays abroad for employment/carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad or a person who is not resident in India for a period over 182 days is a non-resident Indian. Persons posted in U.N. organizations and officials deputed abroad by Central/State Governments and Public Sector undertakings on temporary assignments are also treated as non-residents.

Who is a person of Indian Origin?

Generally, under the provisions of Foreign Exchange Management Act a person of Indian Origin is an individual (other than a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan) who at any time held an Indian passport, or he or his father or his grandfather was a citizen of India by virtue of the Constitution of India or Citizenship Act, 1955 (57 of 1955). Non-resident foreign citizens of Indian Origin are treated on par with non-resident Indian citizens for the purpose of certain facilities.

Do NRIs and PIOs require permission of Reserve Bank to acquire residential property in India?

NRIs and POIs do not require permission from RBI to acquire residential / commercial premises in India (other than agricultural land/farm house/plantation property). A person resident outside India acquiring property to carry on business from India has to file with the Reserve Bank a declaration in Form IPI within ninety days from the date of acquisition of immovable property. A citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan cannot acquire immovable property without prior permission of Reserve Bank. However, he can take on lease an immovable property for not more than 5 years treated on par with non-resident Indian citizens for the purpose of certain facilities.

How much housing loan can one get?

Housing loan will be sanctioned depending upon your repayment capacity and according to your income. Your spouse's income can be included, if you want to increase the amount of your loan. The maximum loan that can be sanctioned varies with housing finance companies and ranges from Rs.10 lakh to Rs.1 crore.

What is reducing balance?

Reducing balance is the method of reducing the principal amount already paid, from the outstanding loan amount. Every time you make a payment, you pay interest on that part of the original principal sum that has remained un-repaid till then.

What are the tax benefits that are available if one avails of housing loan?

Tax benefits are available on both the principal and interest components of the loan as per the income tax act. The upper limit of the amount of deduction of interest repayment allowed from your gross total income is now Rs. 75,000 p.a. Besides, Sec. 88 offers you tax benefits for principal repayments. The principal repayment amount included in the overall limit of Rs 60,000 offered by this section is Rs 10,000.

Which loan is cheaper the monthly reducing balance or the annual reducing balance?

The best way is to compare the EMIs and the tenures of the two home loans. The loan carrying the lower EMI for the same tenure is the cheaper option.

What is a fixed rate home loan?

A fixed rate home loan is a loan where the interest rate is constant over the entire tenure of the loan tenure.

What is a floating interest rate?

Floating interest rate loan is a loan where the interest rate payable is linked to the market rate like the bank-lending rate. As the bank rate varies, the interest rate payable by you will also rise and fall. Hence you will have to bear the risk of interest rate fluctuations; the floating interest rates offered are slightly lower than the fixed interest rates.

What is a home Extension Loan?

A home extension loan is a loan, which helps you to meet the expenses of any alteration like extension/expansion or modification of your home. You can avail of a home extension loan, after obtaining the requisite approvals from the municipal corporation.

What is home Improvement Loan?

A home improvement loan is one that is made available for you to do certain external work like structural repairs, waterproofing or internal work like tiling and flooring, plumbing, electrical work, painting, etc.

Is it necessary to obtain any permission, from the Income Tax authorities if I want to purchase any immovable property?

There is restriction on transfer of immovable property under Section 269UC of the Income Tax Act.

Does the Indian Income Tax Act offers any special incentive for purchase of residential property by obtaining finance either from banks or other financial institutions?

Under Section 88 of the income tax you can claim benefit for the principle repayment, interest on loan is deductible u/s 24 from income from House Property.

What are the formalities specified under the Indian Income Tax Law, if any, that one has to complete before or after selling any house property, commercial or residential?

You have to obtain Permission u/s 230A of the Income Tax Act if the value of the property to be sold is more than 5 lakh.

What are the tax implications of sale of any house property, commercial or residential?

You are liable to pay Tax on profit arising from sale of a house property under the head Capital Gain.

Is there any way by which I can claim exemption from tax on capital gain?

The Income Tax act has made provision u/s 54 & 54A--G of the act whereby you can claim exemption from tax on capital gains.

Which documents are to be verified before purchase of a Flat?

Before you purchase a flat, you have to have a title and document search conducted by a competent advocate. You cannot do it yourself. You have to use the services of a competent advocate. It is a professional job to be done with professional assistance.

What is the difference between built up area, super built up area, and carpet area?

Carpet Area: This is the area of the apartment/building, which does not include the area of the walls. Built up Area: This includes the area of the walls also 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 in the case of multi-dwelling units.

What are all the important documents one should check before buying any property?

If you want to purchase a property, you have to look at the approved layout plan, approved building plan, ownership documents, carryout search, etc. Contact an advocate before you purchase a property so that he can advise you.

Who is liable to pay Stamp Duty - the buyer or the seller?

The liability of paying stamp duty is that of the buyer unless there is an agreement to the contrary. Section 30, of Bombay Stamp Act, 1958 states the liability for payment of stamp duty.

In whose name are the stamps required to be purchased?

The stamps are required to be purchased in the name of any one of the executors to the Instrument.

What is meant by the market value of the property and is Stamp Duty payable on the market value of the property or on consideration as stated in the agreement?

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 market value which ever is higher.

Which are the instruments that attract the payment of Stamp Duty?

The instruments like Agreement to Sell, Conveyance Deed, Exchange of property, Gift Deed, Partition Deed, Power of Attorney, settlement and Deed and Transfer of lease attract Stamp Duty on market value of the property.

Who is the appropriate authority for knowing the market value of the property?

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.

What are the risks associated in buying a flat on Power Of Attorney (POA) basis?

Purchasing a flat on a POA basis is not permitted under the law of the land.

Is a POA revocable?

Yes, a POA can be either revocable or irrevocable, depending on what sort of a POA one has made.

What exactly do we mean by a Free Hold flat? What are the advantages and disadvantages, if any?

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 lesser / lessee involved.

How to convert a POA flat into a Free Hold one?

POA cannot be converted into anything. Leasehold properties of DDA in Delhi can be converted to freehold, as per provisions.

What is the difference between built up area, super built up area, and carpet area?

Carpet Area: This is the area of the apartment/building which does not include the area of the walls. Built up Area: This includes the area of the walls also. 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 in the case of multi-dwelling units.

Who is liable to pay Stamp Duty - the buyer or the seller?

The liability of paying stamp duty is that of the buyer unless there is an agreement to the contrary. Section 30, of Bombay Stamp Act, 1958 states the liability for payment of stamp duty.

In whose name are the stamps required to be purchased?

The stamps are required to be purchased in the name of any one of the executors to the Instrument.

What is meant by the market value of the property and is Stamp Duty payable on the market value of the property or on consideration as stated in the agreement?

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 market value which ever is higher.

Which are the instruments that attract the payment of Stamp Duty?

The instruments like Agreement to sell, Conveyance Deed, Exchange of property, Gift Deed, Partition Deed, Power of Attorney, settlement and Deed and Transfer of lease attract Stamp Duty on market value of the property.