Archive of Questions
Browse through questions posted by our viewers.

Q. Recently, the Govt. of West Bengal raised the stamp duty on registration of house property situated in municipal area and corporations other than area falling under Calcutta Improvement Trust and Howrah Improvement Trust from 6% to 8%. I purchased a flat measuring 937 sq. ft. and 120 sq. ft. of car parking space at the ground floor in the same apartment near Lake Town, under South Dum Dum Municipality on March, 2002. The property is yet to be registered in my name. Please let me know how much I should pay for registration at the present rate of fees and what will be the basis of the valuation of the flat at the time of registration. Is the Central Government going to issue a circular effecting the stamp duty rate to be pegged at 5 % for the whole of India as stated by some newspapers?
Ans. What do you mean by purchased in March 2002 and not yet registered? The purchase of immovable property is incomplete until registration. You will now have to pay 8% of the valuation of the flat in question and the valuation will be determined by the concerned Registrar. Stamp Duty, like Sales Tax being a State subject, the Central Government cannot force but impress upon the State Governments to have a uniform rate of duty as has been done in case of many items under Sales Tax.

Q. A residential site was sold in 1992 for Rs. 1.38 lakhs through an agrement of sale by the father who is no more now. The buyer wants to register it now with the sale deed amount mentioned as Rs. 4.5 lakhs. If we register the sale deed, will the son have Income Tax problems? The son is not receiving any consideration now. Is there any other way?
Ans. Since the sale agreement was for Rs. 1.38 lakhs, the sale deed must also be for the same amount. It cannot be for Rs. 4.5 lakhs. The son will face Income Tax problems if the value is increased. There is no need to increase the value.

Q. I have sold a property and bought a flat (construction to be completed within a month) for half the value of the sale proceeds. Since the sale of the property 8 months ago, I am residing in a rented house. I have the indexed value of the property sale. Apart from this, can I avail tax exemption on brokerage charges & the cost of shifting to a rented premises i.e. charges paid as advance, rent & brokerage for the rented premises.
Ans. You can claim deduction on brokerage charges, for sale of the property but expenses made by you on account of the rental accommodation are not deductible.

Q. Our house is owned by our mother. Do I and my brother need to get the house willed to us or will we be the legal heirs?
Ans. All children of a Hindu female are her legal heirs, if she dies without leaving a will. If you and your brother are the only children of your mother, then on her demise, you will inherit the house in equal shares. If, however, you have any sisters, they will also get equal right. If you want to prevent that, it may be a good idea to have your mother execute a registered will whereunder she will bequeath the property jointly to you and your brother.

Q. I have purchased a flat from a builder, constructed on leased land from a development authority. The original lease agreement is with the builder and the authority for 30 yrs at a rate of 80 paisa/ sq ft. Will there be any problems if I want to sell the flat?
Ans. Since the Builder has leased land, he must have subleased it to you. Your perception that you have purchased the flat is incorrect. Unless there is a bar under the lease between the Builder and the Development Authority, there should not be any problem in your transferring the sublease rights in favour of a third party. This requires careful study of the document of lease and you should consult a lawyer, if necessary.

Q. Does the Stamp Act of Madhya Pradesh attract stamp duty on amalgamation of the Company on Transferor/ Transferee Company?
 Ans. The Madhya Pradesh Stamp Act does not attract stamp duty on amalgamation of companies either on the transferor or the transferee company.
Stamp duty is attracted in respect of transfer of immovable property on amalgamation of companies in Maharastra, Gujarat and Karnataka.
The High Court in Maharashtra has also held that stamp duty is leviable on any amalgamation involving transfer of immovable property, irrespective of whether the State Government had amended its Stamp Act to provide for the same or not. This is causing problems in the remaining states where the Stamp Act has not been amended. Presently, in a case in the Calcutta High Court the matter is under litigation and 20 similar applications are awaiting the final decision in this case.

Q. I am a 67 year old owner of a residential house which is used for my residential purpose. During the previous property tax assessment by local Municipal authorities, they hiked the rate of tax per quarter 8 times higher from the present rate. Moreover, no physical measurement procedure was observed for ascertaining the covered area of the building. I was only intimated about the astronomical enhancement by the municipality. No intimation was conveyed to me afterwards for the opportunity of being heard with regard to the steep enhancement of property tax from Rs. 200/- per quarter to Rs. 1560/- per quarter. On making representations to the municipal authorities, they said no written communication is sent to the assessees for intimation to appeal. Therefore the new tax rates have to be paid. Is the municipality justified in hiking the rates as high as 8 times. Can I apply to the municipality to reconsider my assessment now? It was not appealed earlier due to serious illness. What other remedies can I take recourse to for natural justice & fairness?
 Ans. From the facts stated by you, the action of the Municipality seems unjustified. Normally the Municipality proposes an enhancement and calls a rate payer for a hearing. It is not understood why this process was not complied with in your case. There has been an obvious miscarriage of justice. You should file a writ petition under Article 226 of the Constitution of India before the High Court which will normally direct the Municipal authorities to hear your representation and then to pass a reasoned order.

Q. I want to buy land and construct a house in India. Is it possible to buy a land and construct house in my name (e.g. registration of land), without being present in India? Do you have a checklist of legal procedures, for buying (residential) land and constructing a house?
 Ans. Yes. it is possible to both, buy land and construct a house in your own name in India without being physically present provided you have a reliable local person to act as your constituted attorney and to handle the formalities on your behalf.
The legal procedures for buying land and constructing a house, vary from state to state but the general requirements are:
(a) Identifying the land;
(b) Negotiating with the land owner and settling the price and terms.
(c) Having a survey done to ascertain the area of the land.
(d) Having the title searched through a lawyer.
(e) Taking a registered sale deed of the land in your favour by payment of stamp duty and registration fees. (Note: Forex remittance for purchasing residential property is now freely repatriable.)
(f) Applying for and obtaining mutation in your name in the municipal records.
(g) Applying for and obtaining sanction of building plan.
(h) Constructing the building in accordance with sanctioned plan.
(i) Obtaining occupancy certificate of the building from the Municipal Corporation.

Q. We saw a house and paid a deposit of 50,000 INR as a token amount. (We have a document signed by him for receiving the deposit). Then, we did not have the photocopies of the house papers in our hand. When we got it a week later, we found inconsistencies and we did not want to buy the house any more. Are we entitled to a refund of the deposit amount we made which the seller is refusing to hand over?
 Ans. Your right to receive a refund depends on the contents of the document signed by the seller at the time of receiving the deposit. If the document gives you the right to cancel and receive a refund, you may legally demand a refund. However, if the document allows him forfeiture, then you do not have the right to receive a refund.

Q. My father had bought 2 flats in a building in Mumbai at construction stage. Only one agreement was made for both the flats in the joint names of my father & me. The stamp duty and registration has also been paid on the agreement. Meanwhile, both my father and mother have passed away intestate. Now, due to a family agreement, we are planning to transfer one of these flats to my brother. What is the procedure to get the flat agreement split? Also, since we had already paid the stamp duty and registration, will this exercise have to be repeated, since we are only transfering the ownership by family arangement and not reselling?
 Ans. An agreement is the first stage of a transaction in any immovable property. The transfer is completed by a sale deed. The law requires that agreements have to be stamped and registered. The stamp paid on an agreement is waived on the sale deed but registration has to be repeated. In your case, the agreement holders were your father and yourself and since he has expired, his rights in the agreement has devolved equally on all his legal heirs who we presume are you and your brother. Thus in effect when the flat goes exclusively to your brother, you are transferring your interest in the flat to your brother. Such a transfer is not a family arrangement but a transfer without consideration from yourself to your brother. Hence, it is stampable and has to be registered to confer absolute title to your brother. Also, it will be advisable to have the sale deed registered in respect of both the flats - one sale deed should be made in respect of your flat and the other sale deed should be made in respect of your father’s flat where you should join as a confirming party. This is the way the agreement gets split and both of you get title and title documents in respect of your two flats. Prior to having the sale deeds stamped and registered, the transfer has to be completed by you in favour of your brother in respect of your ½ share in the flat being taken by your brother. This is of course assuming that under the original sale agreement it is clearly mentioned which flat has been purchased by your father and which flat has been purchased by you. If this is not clearly stated then the documentation will be different.

Q. I am a British expatriate living and working in Dubai. My wife and I are frequent travellers to India and wish to purchase a home in Goa for the ultimate purpose of retirement. We have enquired about this several times and heard various answers, from "no possible way", to "Yes, but you must live in India permanently for 3 months first" and also "It is no problem as such, but a lengthy process with lots of red tape". Please, clarify the situation?
 Ans. Yes, you can purchase & hold property in India for residential purpose if you have a 'Resident in India' status. To qualify for this status you have to stay in India for more than 182 days in the preceding financial year. Once you acquire the said status, you have to make an application to the Chief General Manager, Exchange Control Department (Foreign Investment Division -III), Reserve Bank of India seeking permission to purchase the property. When the permission is obtained, purchase the property and thereafter, within 90 days of such acquisition, file a declaration with the Reserve Bank Of India.

Q. I am a U.S. citizen. I want to buy a house in India. Can I buy one legally?
 Ans. Yes, you can legally purchase a house in India assuming that you fall within the category of PIO i.e. Person of Indian Origin. The funds for such acquisition has to come to India by way of inward remittance or out of funds held in NRE (Non-Resident External) Account in India.

Q. Can a person holding a GPA, which is not registered can sell the said property to others and registered the sale deed also on behalf of the owner?
 Ans. Yes, a person holding a general power of attorney can sell and register a property on behalf of the donor of the Power of Attorney, even if the Power of Attorney is not registered.

Q. My parents bought a shop in Bharauch, Gujarat, India, from a builder over 5 years ago. As we were abroad my grandfather completed the deal in his name. He also rented it out without a tenancy agreement. The tenant has regularly paid rent by cheque to my grandfather. We have now been told that the rent that is declared to the tax man is only Rs 2000 but that he is receiving Rs 6000. My grandfather says that this is because the local tax is 65% on any rental income and so he has only declared such a low amount. We have also discovered that the builder did not get planning permission when he built the shops and office building and as a result the property cannot be registered. What is the tax on rental income in Gujarat (there being no other income in India)? Can this be reduced by making charitable donations? What is the status of the shop? How can I get the property transferred to my parents' name? How can I ensure that on my grandfathers' death the shops are transfered to my parents and not to my uncles and aunts?
 Ans. Property tax in Gujarat is 65%. This is charged by the municipality. This is not Income Tax which is 30% throughout India.
Income Tax can be reduced by making donations to charitable institutions which hold exemption certificates.
It is most unfortunate that proper enquiries were not made before buying the shop. Even, if the building plan is not sanctioned, there should be no problem in the builder registering the sale deed. If he doesn't do it, you can file a complaint before the Consumer Forum. Since the sale deed has not yet been registered, it is best to take the sale deed in the name of your parents from the builder and your grandfather can be a confirming party to the sale deed. It will be as if he has nominated your parents to receive the sale deed.
This is the best way to ensure that the property does not go to your uncles and aunts. If there is any difficulty in gettin the sale deed done now, then you can get a registered will from your grandfather in favour of your parents and on his death, the will can be probated and the property will belong to your parents.

Q. I want to know about housing societies laws on non occupancy charges for flats/shops given on leave and license?
 Ans. Housing Societies are free to fix non occupancy charges by their by-laws and there is no law/ statute on the subject. Laws of Housing Societies vary from State to State. Please mention the state in which the Housing Society is registered.

Q. I have recently purchased a house. Since it is far from my place of work, I am planning to rent out my house and stay in the present rented house. I have availed of a housing loan of Rs 7 lakhs on the property. I am paying a rent of Rs 4500 and expect a rental income of Rs 5000 from the property. Am I eligible for tax benefits on the principal and interest of housing loan paid?
 Ans. You are entitled to tax benefits on the principal and interest on the housing loan to the extent permitted and determinable on the basis of your other income and return.

Q. I am resident abroad. What do I need to do to cancel a power of attorney, that was given to acquire property, once the property is purchased?
 Ans. To cancel a power of attorney (presuming it is registered) you have to execute and register a deed of revocation. As a measure of abundant precaution, a public notice in the leading local newspaper where the property is situated should also be issued. You can execute and register the revocation abroad and publication of the notice can be done through your representative in India.

Q. My grandfather acquired a property (in Madhya Pradesh) around 70 years ago. During his life, he partitioned the land and the house in two parts in favour of my father and uncle. Our dilemma is regarding the portion which my father acquired through this partition. He built a new house on it. Is he free to sell/gift/will this property to anyone he wants to? Will it be considered ancestral property (as it came through my grandfather) and will have to be necessarily passed on to the immediate survivors i.e. wife, only son (myself) and only daughter(married)? If it has to be passed on to the immediate family in what ratio will it be divided between my mother, my married sister and myself? If he can sell/gift/will it to anyone what precautions can we take as he is mentally ill and anyone can take advantage of the situation? Who is the owner if he dies without doing anything about the property?
 Ans. Since your grandfather acquired property and then gave away partitioned portions to your father and uncle, your father's property becomes his own property. It is not ancestral property. Ancestral property is only that property which is inherited and held in common with the ancestor. This is of course presuming that the partition done by your grandfather is legal and valid (stamped, registered, etc.). Since it is your father's own property, he is free to sell/gift/will the property. Upon the demise of your father, the property will pass on to his wife, son and daughter in equal share. If your father is mentally ill then it is best for you to move an application before the District Judge appointing your mother/yourself as his guardian. This way, any action taken by your father will be null and void in the eyes of law.

Q. My paternal grandfather during his lifetime owned a building constructed upon leasehold land. He left a will leaving a life interest in the building to my mother and then bequeathed it to me absolutely after her death. My mother has purchased the leasehold of the land of the buliding and put it in her name. She now claims that the property is hers and that I have no rights over it. Is she right? She is proposing to undertake stuctural alterations in the property against my wishes. Can she do this legally with a only a life interest? What are my rights in the property? My father is deceased and I have no siblings.
 Ans. She is not right. After the purchase of the leasehold right, she is the owner of the land but she is not the owner of the building. I am not privy to the original lease deed but it can be generally said that she will become the owner of the building after the leasehold term expires. creating a charge on the property or any part or any portion thereof.

Q. We have purchase a flat and paid as per agreement value. But Builder is charging us Parking charges for Rs 25000.00 and lumpsum amount for water and other legal charges.Kindly advice.
 Ans. Obviously, the builder is trying to charge you illegally and you should protest and not pay the illegally demanded amounts. Please however go through the contract very carefully before lodging your protest.

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