|
“Many foreign nationals of non-Indian origin have purchased mainly in Goa on a five-year lease, but hold no title until they apply for residency. However a new visa limiting stays to 180 days may put a spanner in the works. The old investor trick of buying through an Indian company structure is a loophole that is shortly due to close. So any property purchased in this manner ‘is necessary for or incidental to carrying on his business’.
“The exception to this rule are Non-Resident Indians (NRI) both Indian citizens and foreign citizens of Indian origin who can purchase and own property in India personally and require no RBI approval.
“The purchase process is straightforward with a standard agreement of sale drawn up. Upon signing, a 10-20% deposit of the purchase price is payable. Post due diligence, with checks from an independent attorney, the buyer acquires title documents from the seller. After all conveyance documentation has been stamped at the Stamp Duty office, the final balance is payable, deed registering takes place and government duties are paid.
“Stamp Duty varies from state to state. For example in Mumbai it is 10% whilst in Bangalore is can be as low as 4%. Registration fees tend to be around 1% of the property’s value. The whole process takes approximately two months from start to finish. Non-Indians may only receive Indian properties if they are residents of India.
“Despite rental yields of between 4% and 8%, the downside to India’s rental market is its laws which favour the tenant, though these will change in time as the market matures. Non-residents earning rental income are taxed at progressive rates.
“No inheritance or gift tax is levied in India, though the recipient of assets is subject to wealth tax. The sting in the tail is that non-Indians receiving Indian properties may do so only if they are residents of India.”
|
