Gifting property in India is a common practice among non-resident Indians (NRIs) who wish to transfer their assets to their loved ones. However, NRIs must follow specific steps to ensure a smooth and legally valid property transfer. This article aims to provide valuable tips for NRIs planning to gift property in India, addressing the necessary considerations and legal obligations involved. By understanding the key aspects of gifting property as an NRI, you can navigate the process confidently and avoid potential pitfalls.
According to Indian law, NRIs must obtain prior approval from the Reserve Bank of India (RBI) to gift a property in India. The Supreme Court has emphasized the mandatory requirement of obtaining permission from the RBI for property transfers involving foreign nationals. In a ruling in 2021, the court stated that any agreement or contract, including gifts, related to the transfer of immovable property by an NRI without the RBI's permission would be unenforceable in law.
To comply with RBI regulations, NRIs planning to gift property in India must ensure they obtain the necessary permission before proceeding with the transfer. The RBI's prior approval is indispensable, and any transactions conducted without it are deemed unlawful. By adhering to these regulations, NRIs can safeguard the legal validity of their property transfer and prevent any complications in the future.
Property buyers are a group of stakeholders of the real estate industry under the protection of The RERA Act. Hence, If you are looking forward to making a purchase of residential flats in Mulund, it is imperative for you to ensure it is certified by RERA. How does RERA affect the buyers of new residential projects in Mulund?
When gifting property in India, NRIs are also responsible for paying stamp duty and registration charges, similar to Indian citizens. However, certain states provide rebates or exemptions on stamp duty if the property is gifted to a relative. It is crucial for NRIs to understand the defined list of relatives as per Indian law to determine the applicable stamp duty rates.
The legal definition of relatives includes immediate family members such as parents, spouse, siblings, children, and their spouses. Additionally, step-siblings, step-parents, step-children, grandparents, grandchildren, and their spouses are also considered relatives. Gifting property to these relatives may qualify for full or partial exemption from stamp duty and registration charges.
On the other hand, gifting property to individuals who do not fall under the legally defined list of relatives would be considered gifting to non-relatives. In such cases, NRIs would be liable to pay the standard stamp duty and registration charges. It is essential to consult local authorities or legal professionals to determine the exact stamp duty rates applicable in a specific state.
To ensure a smooth property gifting process, NRIs need to complete certain documentation and legal formalities. Here are the key steps to consider:
Given the legal complexities involved in gifting property in India, NRIs should consider seeking professional assistance to navigate the process effectively. Here are a few professionals whose expertise can be invaluable:
Gifting property in India is an emotional and significant decision for NRIs. By understanding the legal requirements, including obtaining prior approval from the RBI, considering stamp duty exemptions for relatives, completing the necessary documentation, and seeking professional assistance, NRIs can ensure a hassle-free and legally valid property transfer. It is crucial to conduct thorough research, consult legal experts, and follow the prescribed procedures to protect your interests and ensure a smooth transition of your property to your loved ones in India.
We deliver a high level of craftsmanship with a stress-free approach.