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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 shall be purchasing offce space in Bangalore with the intention of renting it out. What are the taxes I would have to pay like corporation tax and property tax?

— Hood Munaim

• The rental income so received by you will be charged to income tax. If you show that it is your business to buy properties for giving it on rent then it may be beneficial to you. Further, you should take a bank guarantee if possible. Alternatively, you could try for a higher deposit to safeguard your property.
• In most states of India, the municipal corporation charges very high property taxes in case of a commercial property is rented out. It is advisable to check the local laws applicable in Karnataka in this regard by visting the local municipal office and finding out what will be the property taxes charged by them assuming you rented out a office to someone.
• Only if you are satisfied that you will get a good monetary return after providing for the property taxes & income tax on the rental income should you go in for renting an office.

We are NRIs who bought a property in India 20 years ago. What are the tax implications if we sell it now? Do we only pay the capital gains tax or do we have to file a regular tax return? What is the simplest way to sell this property and satisfy all legalities.

—M Bhasin

If you sell any property in India you will have to pay the capital gains tax which is nothing but the difference between the cost & the sale price. However, you do get the benefit of indexation which is nothing but a benefit of inflation . To know more about this kindly refer the capital gains section in the website www.indiantaxlaws.com where you will know all the implications in detail. You are also governed by Chapter XII -A which deals with special provisions dealing with non residents of the Income Tax Act which you should go through in the same website. I suggest you should also refer the section titled "Checklist for Purchase & Sale of a Property" in www.indianpropertylaws.com where as a seller whatever is expected for you to look into has been stated. After you have referred to both these websites, I am confident that all your queries will be solved.

I want to transfer my property to my daughter's name. Is it true that this will involve substantial registration charges and stamp duty?

—Mohammad Shafiulla

While transferring the flat to your daughter's name you will have to spend a substantial amount of money due to the following :

• You will have to ask a lawyer to make a gift deed
• You will required to pay the stamp duty on the market value of the property
• You will be also required to pay the neccessary registration charges

I'm planning to buy a house in Calcutta. It's a ground floor apartment in a complex of six apartments. The land for the complex was given to the promoter by two brothers and one sister under the agreement that they will own three of these six. The apartment I would like to buy is owned by one of them. Supposedly the land was gifted by father to his three children. I would like to know what papers/agreements/deeds of the property I should look for to ensure that deal is totally legal.

—Saday Tiwari

The main thing you should look out in any purchase of a immovable property is that there should be clear title of the property intended to be purchased. This involves asking the seller to produce before you or your lawyer all such agreement/s or document/s by which he claims to be the rightful owner of the property. Once he does furnish these documents you should get the same checked up by a competent lawyer & before concluding any such deal it is advisable to invite claims by placing a public notice in two leading newspapers of such intended sale.
Further, in your case also check whether proper stamp duty was paid on the gift deed and whether the gift deed was registered .

I have a flat at Madras constructed with the assistance of a housing loan from my Employer (National Bank for Agriculture and Rural Development) in March 1997. Now I would like to sell this house and go in for a bigger flat. But I could not get permission from my employer for sale of this house for the reason that I have to refund/return the IT benefits availed from the housing loan deductions as well as the accrued interest.
I would now request you that Is there any condition like that the house can be sold only after five years of construction. Or if I am putting the entire money out of the sale proceeds in the new project, whether I can get any exemption?

—Nabahm

The few things which you must keep in mind at the time of sale of a property is that you do not violate any agreement with your employees or lender and you must hold a property preferably for a three year period. Any property held for more than three years will subject you to long term capital gains tax. Further, if you are investing the entire money out of the sale proceeds in the new project, you will get any exemption provided you have held the original capital for three years.

What constitutes conclusion of the sale. If it means handing over the keys, then that was obviously done after the entire amount was received. Could you please clarify further?

—Arundhati and Mahesh Jukar

The transfer of a flat is coupled when you have a agreement of sale coupled with actual possession. Generally, in all cases the entire amount is paid simultaneously with handing over of physical possession. If you give possession after having entered a sale agreement, you would be liable to be taxed even if you have not received the full consideration.

I want to know that what are the procedures which are to be adopted when selling a plot of land to a promoter and going for a joint venture and what is the sharing ratio.

—Manas Roy Burman

While selling a plot of land, you should first of all find out more about the promoters past dealing. Check whether he has honoured all his commitments with all other persons with whom he has had prior dealings. Then you must identify a promoter. Later discuss the basic terms and conditions with the promoter. It is at this stage you must appoint a competent lawyer for yourself. As regards the sharing ratio there is no fixed rule and it is subjective.

I intend to give an apartment on a leave and licence basis. I am informed that the above requires stamp duty payment and registration charges. Has the stamp duty deparment fixed the rates applicable on the above two as of date. Or have we to exercise more patience, though the above law has come into existence since April 1, 2000.

—Kishore Gulabani

As per Section 55 (1) of the Maharashtra Rent Act, 1999, any agreement for Leave & Licence of any premises entered into after commencement of this Act shall be in writing and shall be registered under the Registration Act, 1908 . As per section 55 (2) , the responsibility of registering the agreement lies on landlord.
The stamp duty authorities are demanding stamp duty applicable to tenancy agreement as per Article 5(g-d) of the Bombay Stamp Act, 1958. To refer the Bombay Stamp Act schedule visit www.indianpropertylaws.com and refer the Stamp duty section where the whole Schedule - I of the Bombay Stamp Act, 1999 is reproduced.

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

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