Investing in the real estate sector in India has become an extremely lucrative proposition for NRIs, thanks mainly to the favorable currency rates due to the falling of the rupee.
In recent times, under the given global condition, NRIs have a Silver Lining to make worthwhile investments in the Indian Real Estate sector.
NRIs can invest in several properties in India for long term returns for when they return to the motherland – but to reap these benefits have to ensure they keep a few things in mind while they invest in property.
If these investments are not done with proper due diligence, one can find themselves stuck in unnecessary legal complications or paying penalties that could have been easily avoided.
An NRI does not require any special permission when they plan to buy property in India, however, it is essential to get the property registered so that the property is legally transferred to their name.
Procedure for registration of property in India
The registration process has become much simpler with some basic paperwork requirements. For instance, in some states, an applicant is required to submit an application to the respective authority (Sub-Divisional Magistrate or the Sub-Registrar of that area) for the registration of their property.
The process of registration also involves stamp duty and paying a requisite fee for the registration of a sale deed/transfer deed. You have to have the documents legally recorded with the concerned authority of that area to ensure you don’t default legally and lose ownership of your property.
Finally, to complete the registration process, the authorised signatories for the seller and the buyer along with two witnesses are required.
These signatories should have proof of identity, for example, Aadhar Card, PAN Card or any other document issued by the Government. The property card, original documents and proof of payment of stamp duty all have to be submitted to the sub-registrar for successful registration of property.
For NRIs wondering if they need to physically be in India to get all the paperwork done – the answer is – no! You as an NRI do not physically have to be present to complete the registration process.
You can delegate a close relative/friend/trusted individual as the Power of Attorney who would be authorised to make decisions and get the work done in your favour.
Steps to Consider Before Registration
#1 Verification and Encumbrances
When you decide to invest in property in India, the current owners of the property have to produce the relevant documents verifying their authentic ownership of the property, if you do not obtain the original documents, you may end up losing money and ownership of the property.
It is also important that you ensure there are no encumbrances. This could create difficulties in the transfer of property from one owner to another. Examples include outstanding mortgages, unpaid debt, unpaid property taxes, etc.
An investor should be careful and check for any such encumbrances on the property before purchasing it.
The basic list of property documents that an NRI needed during property buying in India are:
- Title Deed (in the name of the seller)
- Sanctioned Building Plan
- Commencement Certificate
- Occupancy Certificate
- Tax Paid Receipts
- Encumbrance Certificate
- Khata/Mutation Documents
Documents need by an NRI during the purchase of a property in India:
- PIO/OCI Card
- PAN Card
- Registered Power of Attorney
- Proof of Address
Documents required at the time of registration:
- PAN Card
- OCI/PIO Card
- Passport Size Photograph
- Address Proof
#3 Valuation and fee for registration
Based on the location and type of property, you will need to get an accurate estimation done of the value of the property. You will have to ensure you do it according to current market trends.
This estimation is essential for calculating the stamp duty to be paid for property registration.
The calculation of stamp duty and the registration fee is based on the ‘guidance value’ and the type of property. This ifee is decided by the State government.
#4 Stamp paper duty
Stamp papers can be purchased online or from a licensed stamp vendor.
NRIs or their authorized representatives have to purchase non-judicial stamp papers according to the estimated value of the property and the stamp duty thus calculated.
Stamp Duty varies from state to state and is collected during the registration, as a percentage of the saleable value of the property. It can also differ on the basis of the type of property – whether it is new or old; or on the location of the property.
This functions as a legal document and can be used as a piece of evidence for the purchase or sale of any property.
#5 Sale Deed
The next step involves preparing the sale deed. This task can generally be performed by an attorney on behalf of the NRIs buying the property. The precise contents of the sale deed vary according to the exact nature of the property being purchased.
The documentation should include the details of the parties to the transaction, the property involved and the requisite terms and conditions.
#6 Approval of Sub-registrar
Once all the documents are ready, you or your representative will have to visit the office of the sub-registrar in the city where the property is to be registered.
The individual submitting the documents will need to take along two witnesses carrying valid ID proofs and the sale deed to get it registered.
#7 Non-registration of property
As a buyer, you have to get the property registered within 4 months of the date of execution. In any circumstance you fail to get the registration done within the time-limit – then an application for condonation of delay can be made to the sub-registrar along with payment of a fine.
The registration process is completed once all the documents have been verified and then the registration documents can be collected by the NRIs or their representatives.
If you are not sure where to start and don’t have a relative who may be able to carry out these essential tasks for you, you can reach out to PropTech Solutions to make your property management a piece of cake!