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What documents should I check before buying a new flat?
  • Registered Sale Deed/ Conveyance deed of land, if private property

  • Registered Joint Development Agreement, if applicable

  • No Objections/ Permissions received from Government for their lands

  • Title Deed given by lawyers

  • Encumbrance Certificate

  • Latest Tax Receipts

  • Approved Building plans

  • Commencement Certificate (under-construction property)

  • Occupancy Certificate/ Building Completion Certificate (newly constructed)

(Above is an indicative list of typical documents. Additional state specific documents may require to be examined. Legal assistance should be sought before concluding any transaction)

What documents do I need to check if I am buying a resale flat?

In addition to the documents in 1 above, other typical documents / aspects:

  • Share certificate

  • Original registered sale deed

  • Parking slots

  • Society maintenance receipts paid till date

  • All utilities paid till date

  • Any claims in case of ancestral property

  • Gift deeds/ release deeds/ will/ assignments

(Above is an indicative list of typical documents. Additional state specific documents may require to be examined. Legal assistance should be sought before concluding any transaction)

How could I verify that the documents shown to me by the seller are genuine?
  • Projects approvals can be verified from the corporation or the sanctioning authority's office

  • Ownership documents can be confirmed from the Sub Registrar's office where they are registered

  • Share certificate related to societies can be verified from the concerned Society itself

What are Capital Gains on property purchase?

Property is considered a capital asset and Capital Gains Tax is levied on the gains arising from the sale of property. Such gains are calculated after adjusting the inflation rate, transfer and renovation charges, etc.

What is the difference between long-term Capital Gains and short-term Capital Gains?

If the house is held for less than 36 months prior to its sale, it is termed as a short-term capital asset and any gain arising from the sale is treated as a short-term Capital Gain. There are no tax exemptions for short-term Capital Gains and one needs to pay it according to the applicable tax slab.

However, if the property is sold after holding it for more than 36 months, it is treated as a long-term capital asset and the gain arising from it is called the long-term Capital Gain. Such gains attract a flat exemption rate as provided in the Income Tax Act, 1961 (‘IT Act’).

How can I qualify for exemptions on the Capital Gains Tax?

There are a few exemptions available for long term Capital Gains, if you:

Buy or construct a new house - If you build a new house or buy one from the money you receive from selling a property, you are exempted from paying the tax on Capital Gains. However, there are conditions as to the period within which such purchase should be concluded or new house built as well as when the same can be sold under the IT Act.

Capital Gain Account Scheme - Through the Capital Gain Account Scheme (CGAS), you can save the received money in designated banks. CGAS helps you in buying time to look for suitable investments as it serves to inform the Income Tax department that you plan to invest the money received; but at a later date.

Invest in Bonds - You can also invest in financial assets or bonds to save tax. Such bonds are specified along with the limits on investment from time to time.

What is Stamp Duty? Who is liable to pay Stamp Duty? Do I get tax benefits on Stamp Duty?

Stamp Duty is the levy mandated to be paid on certain instruments/ documents at specified rates. In case of property transactIons, it is payable at the rate specified in the state of stamping of the sale deed.

Do I need to pay stamp duty if the property is transferred or is a gift?

Yes. However, the amount shall depend on the rate specified in the state of stamping of the sale deed.

What are the taxes/ levies that I need to pay before buying a property?

The buyer needs to pay the following taxes/ levies:

  • Stamp Duty

  • TDS or Tax Deduction at Source at prevailing rates

  • GST or Goods and Services Tax at prevailing rates

What is the difference between government leasehold property and freehold property?

The difference between a leasehold property and a freehold property lies in its ownership . In a leasehold property, the ownership remains with the concerned local authority or the government (as the case may be). The lease period varies typically between 30 to 99 years. But, this does not prevent the individual owner from selling or perform other transactions with the property, provided the lease deed is registered.

In case of a freehold property, the owner of the property is the legal owner and can sell/lease/rent the property as per his/her wish.

What is Power Of Attorney?

Power of Attorney allows a person to authorise another person the right to make decisions regarding the person's assets, finances and real estate properties.

There are two types of power of attorney. First, the 'General Power of Attorney' where a property owner confers 'general' rights. The rights include but are not limited to sell, lease, sub-lease etc. The second one is the 'Special Power of Attorney' where only a specific right is given by the owner to the chosen person.

Can I authorise someone else to register my property by granting him Power of Attorney?

Yes, you can execute Special Power Of Attorney to get your property registered by someone else.

What is property registration?

It refers to the registering of documents relating to transfer, sale, lease or any other form of disposal of an immovable property. Registration is compulsory by law for all properties under Section 17 of Indian Registrations Act, 1908. Once a property is registered lawfully, it means that the person in whose favour the property is registered, is the lawful owner of the premises and is fully responsible for it in all respects.

How can I register my property?

Registration of a property includes necessary stamping and paying of registration charges for a sale deed and getting it recorded at the sub-registrar's office of the concerned jurisdictional area.

What documents would I need at the time of possession?
  • Original copies of the chain of title agreements and Building Plan approvals

  • Original registration and stamp duty receipts

  • Possession Letter

  • Original share certificate (In case of societies)

  • Proof of payment of all dues like maintenance charges, electricity bills, phone, water and property taxes up to the date of handing possession

  • NOC from the Society or other concerned body confirming no objection to the transfer.

Disclaimer:

  • Documents mentioned above are an indicative list of typical documents. Additional state specific documents may require to be examined.
  • Legal assistance should be sought before concluding any transaction.
  • Opinion on taxes should be sought from a chartered accountant/ tax practitioner.
  • The above comments are merely indicative and suggestions based on laws typically prevailing and will require to be examined based on laws/ changes in laws at the specific time of the transaction. The above comments should not be held conclusive.
  • We do not accept any responsibility and shall not be held responsible for any losses/ damages that any person may incur based on reliance placed on the above comments.
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