Font Size   Loans Outgoings for Your Apartment Timely Payment FEMA (Foreign Exchange Management Act) Income Tax Wealth-Tax Exemptions From Wealth Tax Wealth Tax - Rate Disclaimer Loans     The NRI investor can raise finances from financial institutions to purchase an apartment. The Housing Development and Finance Corporation (HDFC) is the leading institution in India in the field. They have offices all over the country and respond speedily and efficiently. Southern Investments projects are eligible for finance and loan applicants can receive assistance and advice from our offices.     Outgoings for Your Apartment     The contract value, indicated in the payment schedule, covers the cost of your apartment and the cost for the undivided share in land. The availability, location and cost of the car park, will be indicated to you at a later stage. The total outgoings of the apartment would generally include the contract value of the apartment, cost of garage, cost of requested additional works, sales tax (computed a flat rate of 2% on the construction value of apartment and garage) Stamp duties and registration charges will be payable by you at the rates actually prevailing at the time of registration of land ownership in your name. Meter deposits, cable charges and other expenses incidental to power, lighting, water connections and registration of share in the land are payable at the time of handing over. Building taxes, corporation taxes and other taxes applicable are also payable. All taxes, levies or charges relating to your apartment, demanded by the government or any statutory body retrospectively or otherwise, remain payable.   Timely Payment     Your payment schedule will be indicated in the land and construction agreements – Sales tax as applicable. Timely payment of all installments on due dates is the essence of the contract. A grace period of 10 days may be permitted from the date on which the installment falls due. Payments beyond the grace period are liable for interest @ 9% p.a. All payments may be made by demand drafts or local cheques only, for which proper receipts will be issued. All payments by NRI's shall be made only through their NRE/NRO accounts. Bank charges for outstation cheques will be debited to your account. You are advised to record all your payments supported by receipts for the purpose of computation of capital gains at a later stage.   FEMA (Foreign Exchange Management Act)     With the liberalization of the Exchange Control Policy, the Government has eased the procedures to encourage NRI investments in real estate. Non-resident Indians holding Indian passport do not require prior permission to acquire immovable property. NRI's holding foreign passport have been granted permission to acquire immovable property subject to certain conditions. Provisions relating to the purchase and sale of immovable property are governed by the Foreign Exchange Management Act 1999 (FEMA) and Income Act 1961. The responsibility of obtaining clearances/permissions if any, from the Reserve Bank of India and/or other statutory authority with respect to the provisions of the above mentioned Act or any other applicable laws rests with you..   Income Tax     The Income Tax Act 1961 and the wealth tax have undergone substantial amendments and impetus to boost investment by NRI/PIO in immovable properties in India. 1) Under section 23 of the IT Act. 1961, there is complete exemption from IT Act in respect of the deemed or likely income from one self occupied property. 2) If the loan taken by NRI on or after April 1999 to acquire a self occupied property within three years from the end of the financial year of the loan, deduction under the provisions of section 24 of the Income Tax Act upto Rs.1,50,000 per annum in respect of interest can be set off against any other taxable income. 3) In respect of the property let out, the permitted deductions will not be subject to the limit of Rs.1,50,000/- 4) With effect from 1.10.1998 any gift made is totally exempt from gift tax owing to abolition of gift tax with respect from 1.7.2002. 5) The requirements to file Form 37-I under Chapter XXC of the Income Tax Act 1961 and to obtain clearance under Sec 269 (UC) and u/s 230A from the department have been withdrawn for transfer of immovable properties. 6) Under Sec71-B of the Income Tax Act 1961, loss in income from house property can be carried over for the next 8 assessment years. 7) Exemption to long term capital gains tax have been provided where the investment is made in residential house property or in specified bonds subject to conditions.   Wealth-Tax     Non-Resident Indian would be liable to wealth-tax in India only when his net taxable wealth exceeds Rs. 15 lakh with effect from the assessment year 1993-94. Wealth outside India is generally exempt from wealth tax in the case of NRIs. The Finance Act 1992 had made drastic changes in the schemes relating to the charge of wealth tax with effect from the assessment year 1993-94. A list of assets which are chargeable to wealth-tax are: a) Any guest house, b) Any residential house (more than one house subject to certain exceptions), c) Motor cars (other than those used by the assessee in the business and running them on hire or as stock-in-trade), d) Jewelry, bullion, furniture, utensils or any other article made wholly or partly of gold, silver, platinum or any other precious metal or any alloy containing one or more of these precious metals (items is used by the assessee as a stock-in-trade, it is not liable to wealth-tax), e) Yachts, boats, aircraft (other than those used by the assessee for commercial purposes), f) Urban land and, g) Cash in hand in excess of Rs. 50,000 for individuals and HUFs and in the case of other persons, any amount not recorded in the books of account.   Exemptions From Wealth Tax     From the assessment year 1999 - 2000 commercial buildings have been exempted from wealth tax. One house property or land upto 500 sq.mtrs will be completely exempted under Sec.5 of the Income Tax Act. Any residential property let out for a maximum period of 300 days in a year will be completely exempted from Wealth Tax. Open land for development purpose will be completely exempted from wealth tax. Specific exemption includes in the case of an NRI who is ordinarily residing abroad and who, on leaving the country, has returned to India with the intention of permanently residing therein, money or the value of assets brought by him to India and the value of assets acquired by him out of such money within one year immediately preceding the date of his return or at any time thereafter. However, this exemption would apply only for a period of seven successive assessment years commencing on the Assessment Year next following the date on which such a person returns to India.   Wealth Tax - Rate     The flat rate of tax which will be same for individuals, HUFs and companies (whether closely-held or widely-held) now is 1 per cent of the amount by which the net wealth exceeds Rs. 15 lakhs with effect from the assessment year 1993-94. It is significant to note that an amendment deals with the clubbing of the wealth of a minor with the wealth of his parent. If the assets held by a minor do not fall within the category of chargeable assets, then the clubbing of wealth will not arise.   Disclaimer     Every effort has been made to avoid errors or omissions. Please inform us of any mistake, error or discrepancy. Being matters of vital importance, the reader is requested to cross-check all material at this website with original Government publications or notifications. Please seek professional advice before acting on any information contained herein. The responsibility for obtaining clearances and permissions from the Reserve Bank of India and / or other statutory authority with respect to the provisions of the above mentioned Act or any other applicable laws rests with you. Southern Investments Pvt. Ltd., expressly disclaim liability to any person, in respect of anything or the consequences of anything done or omitted to be done by any person on the basis of the contents of this website.
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