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Get all your property-related queries sorted out here. Sunil K Ramani, director, Ramani Legal Services Pvt Ltd, will be happy to clarify your doubts.

Readers' Note: Please keep your questions short.

I bought a property in India for investment. I am planning on leasing it from April 2000. Annual income on this property could be more than Rs 1,00,000. What are the tax implications? Do I have to pay the taxes? If yes, do I need to take some Tax ID? Detail explanation on what I need to do is highly appreciated.

— Syam Peela

From the annual value of Rs 1,00,000, you will get various deductions permissible under section 24(1). After the deductions, the net figure is referred to as "Income from House property". If this net figure is liable for income tax, you shall be required to file your tax return.
Also, you must apply for a Permanent Account Number if you wish to file your tax return.

We are NRIs (foreign citizens) who recently purchased a small residential property in India, about four years ago, for personal use in anticipation of retirement after a long time overseas. A small portion of the sale price was paid to the seller in India by encashing foreign currency travellers cheques brought with us to India. The travellers cheques were encashed at an authorized dealer & converted into Rupees for this payment.
The majority of the sale price was paid to the seller overseas in foreign currency. The registry/sale deed was then registered at the local Registrar's office. The local address (of our temporary stay in India) was indicated on the registry instead of our overseas address.
We have these clarifications:

• Form IPI-7 has to be submitted to the RBI by the NRI within 90 days of purchase of property in India only if repatriation of funds is desired later. Does this form apply to NRIs staying within India as well as those staying abroad?
  
• Is the submission of Form IPI-7 to RBI required at all if repatriation of funds by the NRI-foreign citizen is not desired?
  
• Are any tax certificates/clearances such as Tax Form 34A required by the NRI-foreign citizen prior to the purchase of property costing over Rs 5 lakh (in Tax year 1997-98) which were not obtained by him at that time due to unfamiliarity with such local rules/regulations. What can be done about it now?
  
• Will obtaining the PIO card at this point help the NRI-foreign citizen in the above situation at all?
  
• We were told that Income Tax section 230-A may have been applicable to us (since a local address was indicated on the registry), is that correct, if so what can we do about it now, and how do we do it.
  
• If a residential property is purchased in India by an NRI-foreign citizen (PIO) for personal use and the sale price is paid to the seller overseas in foreign currency, is the seller then required to subsequently show an inward remittance of this amount converting the foreign currency received into Rupees for this sale to be considered legal/valid.
  
• That is, whether the sale & purchase of a property in India is considered legal/valid by the govt/RBI, etc. if the sale/purchase transaction is conducted overseas, and the sale price is paid/received by the buyer/seller in a foreign currency. Of course, the property was then registered via sale deed at the local registrar's office on Stamp Paper with full stamp duty paid.

—Ricky Spice

• IPI-7 Form is to be filed by Foreign Citizen of Indian Origin regardless whether they are resident in India or not.
• IPI-7 Form is required only if repatriation of funds is required by the non-resident.
• The relevant notification for this purpose is FERA 152/93-RB dated 26/5/1993 by which RBI gave general permission. It will be of immense help to you, if you go through the same.
• Tax Form 34-A is required to be filed only if you wish to register an immovable property under the Registration Act.
• Obtaining PIO card does not matter in your case.
• The Certificate under Section 230-A is required only if the purchaser wishes to register the document and it indirectly helps to ascertain whether there are any income tax dues pending against the Vendor.
• There is no need to show an inward remittance in such a case.
• Yes. Transactions concluded overseas are considered valid but care must be taken to comply with all relevant laws.

Is TDS on contractors to be deducted @2.2 per cent taking all payments made to him during a financial year, if they exceed Rs 20,000 or only considering individual contracts exceeding Rs 20,000. How does one differentiate between the two?
Are contracts to be one in writing or implied? For example, a carpenter does some work and payment is made on the bill, amount being Rs 19,000 and no TDS is deducted. However, if another piece of work done by the same carpenter for another Rs 19,000. Is TDS to be deducted on the amount of Rs 38,000 @2.2 per cent or both escape TDS.

—Jason Pacheco

Section 194 C deals with TDS at the time of payment to contractors / sub-contractors. As per that section, the tax is to be deducted only if the payment is made in pursuance of a contract.
Section 194C(3) further states that this deduction is required only if the amount paid or credited is either equal to or more than Rs 20,000.

In Bangalore, I heard that there are cases where the seller has sold the land to multiple parties. How does one ensure that you are the only buyer?

—P Kudva

You could ask for a search report in such a case from a competent advocate or solicitor. In fact, documents relating to immovable properties are registered under the Registration Act in order to achieve the object of conservation of evidence and prevention of fraud. Also, it is advisable that the purchaser prior to the purchase of immovable property should also give a public notice of his intention to buy a particular property and invite the claims on the subject property in order to safeguard his interest.

Send in your questions to perfin@rediff.co.in

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