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Buyer's Guide

The information on this page addresses the most common queries and concerns of buyers with regard to stamp duty levied on property transactions in India.

Is an agreement for sale of a flat / shop / office required to be stamped and registered?
Yes, an agreement for sale of a flat / shop / office is required to be stamped and registered as per applicable law.

In whose name should the stamp paper be purchased? Can the client exercise the document on a stamp paper purchased by an Advocate?
As per Sec. 34 of the Bombay Stamp Act, the stamp papers should be in the name of one of the parties who have signed the documents. If the stamp paper has been purchased in the name of an Advocate, C.A., etc., then such instrument shall be treated as an instrument not duly stamped and shall be inadmissible in evidence.

What is the procedure for registration of an instrument?
Once adequate stamp duty is affixed on an instrument and it is dated, signed by the parties and attested (where required) by witnesses, it can be lodged for registration after payment of the registration fee. All parties signing the instrument are required to attend the office of the concerned Sub Registrar of Assurances either in person or through their constituted attorney to admit execution of the instrument. If the signatory to the instrument is different than the person present for registration, the power of attorney in such case will require registration. A copy of the PAN Card is essential for registration.

After lodging an instrument it is registered and the seal of the Sub Registrar is affixed on the instrument, thereafter the original instrument is returned back to the parties.

Is there a time frame within which the stamp document must be executed?
A stamped document should be executed within six months from the date of stamping.

Is it possible to get a refund of stamp duty already paid on an instrument?
Yes, if stamp duty is paid on an instrument but the instrument is not signed by any party then an application is to be made to the concerned authorities for refund of stamp duty within six months from the date of stamping. On receipt of such application, the concerned authorities are empowered to refund the value of stamp duty after deducting such amounts as may prescribed.

Is there a procedure for adjudication of stamp duty?
A person can seek the opinion of the Collector of Stamps by making an application to him for adjudication of stamp duty payable by such person on the instrument. For this purpose, the person has to submit the instrument and other evidences as required, along with the prescribed fee. The Collector's opinion is final and conclusive.

In case of resale of the flat who has to pay the stamp duty, the purchaser or the seller?
The parties can themselves decide who shall pay the stamp duty. If nothing is mentioned in the agreement then as per Section 30 of the Bombay Stamp Act, if the transaction relates to resale of flats, the stamp duty will have to be paid by the purchaser.

Will Stamp Duty have to be paid if there is a deed of family settlement and a flat is transferred amongst family members?
Yes, as per the provisions of Bombay Stamp Act, Stamp Duty will have to be paid on a deed of Family Settlement.

Will Stamp Duty have to be paid if the flat is gifted by a Donor?
Yes.

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 whichever is higher.

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

When is Stamp duty payable on an instrument in Maharashtra?
All instruments are liable to be stamped before or at the time of execution of instrument when executed in the State of Maharashtra.

How is stamp duty paid in Maharashtra?
Various Banks and Financial Institutions have been authorised with a stamping / franking facility at some of their branches. Stamp duty can be paid by a pay order / demand draft drawn in favour of the concerned Bank / Financial Institution. The pay order / demand draft is to be accompanied with a covering letter from the issuing bank that the same is for payment of Stamp Duty. A receipt is issued by the concerned Bank / Financial Institution for the stamp duty amount.

The frequently asked questions and answers on this page are useful for Non Resident Indians who wish to purchase or invest in residential and commercial property in India.

According to analysts, the real estate market in India is worth about US$ 15 billion and growing at about 35 percent a year. With current shortage in housing pegged at 20 million units, demand is only going up by the minute. Reports state, India will face a shortage of over 45 million homes by 2012. In this high growth scenario and with the government relaxing stringent norms, investments from the NRI community have risen from US$ 362 million in 2000-01 to US$ 6.3 billion in March 2007.

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

An Indian Citizen who stays abroad for employment or is engaged in business or vocation outside India or stays abroad under circumstances indicating an intention for an non-resident Indian is an NRI. A person who is not resident in India for a period over 182 days is a non-resident Indian. Persons posted in U.N. organisations and officials deputed abroad by Central / State governments and Public Sector undertakings on temporary assignments are also treated as non-resident Indians.

Who is a Person of Indian Origin (PIO)?
Under the provisions of Foreign Exchange Management Act (FEMA), 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).

Do NRIs and PIOs require permission from Reserve Bank to acquire residential / commercial property in India?
NRIs and PIOs do not require permission from RBI to acquire residential / commercial premises in India (other than agricultural land / farm house / plantation property).

Can the sale proceeds of residential / commercial premises be remitted out of India?
The sale proceeds of immovable property other than agricultural land / farmhouse / plantation property can be remitted out of India on fulfillment of certain conditions.

Can NRIs obtain loans for acquisition of residential premises from authorised dealers / financial institutions providing housing finance?
Yes, NRIs can obtain loans. However, repayment of loan should be made within a period not exceeding 15 years out of inward remittances or out of funds held in the borrower's NRE / FCNR / NRO accounts.

Can Indian companies grant loans to their NRI staff?
The Reserve Bank of India (RBI) permits Indian firms / companies to grant housing loans to their employees deputed abroad and holding Indian passports, subject to certain conditions.

Can NRIs and PIOs gift residential / commercial premises to relatives / registered charitable trusts / organisations in India?
Yes, general permission has been granted by RBI to NRIs and PIOs to transfer by way of gift, immovable property held by them in India, to relatives and charitable trusts / organisations subject to compliance with  conditions and provisions of other applicable laws.

Can NRIs and PIOs give residential / commercial premises on rent if not required for immediate use?
Yes, RBI has granted general permissions for letting out any immovable property in India. The rental income or proceeds of any such income are eligible for repatriation subject to payment of taxes and production of a certificate issued by a chartered accountant with the guidance of an Authorised Dealer, such as, a bank for completion of formalities.

How should NRIs and PIOs make payment of the consideration for residential / commercial property?
The purchase consideration should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from NRE / FCNR / NRO accounts maintained with banks in India.

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 from the date of payment of final installment of consideration amount, whichever is later.

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.

Who can apply for a housing loan?
Any one, including Non Resident Indians, with a steady source of income.

How much can one borrow?
Loans are generally disbursed up to a maximum of 85% of the cost of the apartment. In most cases, housing loan is sanctioned depending upon your repayment capacity and 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 an EMI?
Equated Monthly Installment (EMI) is the amount comprising a portion of the interest and the principal loan amount which is payable by a borrower to the lender every month.

What is a fixed rate housing loan?
A fixed rate housing loan is a loan where the rate of interest is constant through the entire term of the loan.

What is a floating interest rate housing loan?
A floating interest rate housing loan is a loan where the interest rate payable is linked to market conditions such as the lender bank's retail Prime Lending Rate (PLR). A floating interest rate fluctuates as the bank rate varies. Floating interest rates are generally lower than fixed interest rates.

Do institutions accept joint loan applications?
Yes.

What are the documents required to apply for a housing loan?

  • Latest salary slip (proof of income for salaried individuals)
  • Photographs
  • Proof of age
  • Identity papers
  • Proof of residence
  • Bank statements for the previous six months
  • For self-employed: Certified copies of balance sheet, profit and loss statement and tax challans / tax returns for the previous 3 years.
  • For partnership /private limited companies: The Articles of Association, partnership deed and details about the firm.
  • For NRIs: Latest salary certificate specifying name (as it appears in the passport), date of joining, passport number, designation, salary and perquisites, photocopy of labour card / identity card, photocopy of valid resident visa stamped on the passport, photocopy of monthly statement of local bank account and other property related documents.

Which sources, other than housing finance companies offer loans? 
Banks and insurance companies. You can avail loan against your Provident Fund Account, Fixed Deposits, Post office Savings; against shares and debentures of listed companies and government bonds and securities.

What is a Home Extension Loan?
A Home Extension Loan is a loan which helps you to meet the expenses of alterations 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 a Home Improvement Loan?
A Home Improvement Loan is one that is made available for you to carry out certain external work like structural repairs, waterproofing or internal work like tiling and flooring, plumbing, electrical work, painting, etc.

 
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