Re: GOA - Buyer Beware!
 

Hi Douglas,

Thanks for your reply & i agree with your earlier conclusion that only a Messiah might be in with a chance of meeting all the (now strictly enforced) criteria of both FEMA and Immigration! I also agree that the fact that 'suitable purpose' is highly subjective/non quantitive makes it very easy for the authorities to exclude pretty much who ever they want (with the exception of some foreign companies). I also agree that the HCI in the UK is clearly in the process of reducing the term of existing X visa renewals for FNs, presumably with a view to phase them out completely & to refuse to issue fresh X visas now (if an X visa wasn't previously held by the
applicant)(?)

Also, i think Remy already mentioned the statements made by the Foreign office site, but i'm not sure if its since been updated(?)so have added it below:

www.fco.gov.uk (under 'Travel Advice' then under India, the under the 'Goa' and 'General' advice sections) where FNs (considering property purchase in India) are warned of the need to meet the most recent RBI & FEMA criteria & not to buy on a Tourist visa. They also advise FNs to contact a reputable local lawyer, (although clearly this hasn't helped many people who've received conflicting & sometimes incorrect advice, and are now in a precarious position also not helped by the ambiguities of some of the laws & shifting sands of their implementation etc)!

Also under 'General' advice it states (in tune with HCI UK) that the Indian visa regime doesn't have any provision for 'right to abode/right to settle permanently' in India with out aquiring Indian citizenship & goes on to say that only FNs with NRI/PIO/OCI status can aquire Immovable property in India. Maybe they should add, 'The only other acceptable FN catagories are Messiahs, shape shifters and Avatars, who can prove their lineage back to Vishnu!' ;):lol:

Regards TDK

Re: GOA - Buyer Beware!
 

Hi TDK,

Nice summary of the current situation.

I have found some exemptions to FEMA rules on repatriation of foreign currency.

It includes gifts in section5 , so my deed of gift idea should work in your case. I would still be inclined to test the water with the bank concerned.


CIRCUMSTANCES WHERE HOLDING AND REPATRIATION OF FOREIGN EXCHANGE IS "EXEMPTED" FROM FEMA RULES

In following circumstances, the provisions of FEMA will not apply with regard to Holding and Repatriation of Foreign Exchange:

1. Possession of foreign currency or foreign coins by any person upto such limit as the Reserve Bank may specify.

2. Foreign currency account held or operated by such person or class of persons and the limit upto, which the Reserve Bank specifies.

3. Foreign Exchange acquired or received before the 8th day of July 1947 or any income arising or accruing thereon, which is held outside India by any person in pursuance of a general or special permission granted by the Reserve Bank.

4. Foreign Exchange held by a person resident in India upto such limit as the Reserve Bank may specify, if such foreign exchange was acquired by way of gift or inheritance from a person who acquired or received it before 8th of July 1947 or if the income has occurred to him, which was held outside India in pursuance of a general or special permission granted by the Reserve Bank.

5. Foreign Exchange acquired from employment, business, trade vocation, services, honorarium, gifts, inheritance or any other legitimate means upto such limit as the Reserve Bank may specify.

6. Such other receipt in foreign Exchange as the Reserve Bank may specify.

Re: GOA - Buyer Beware!
 

Hi Douglas,

Thanks very much for taking the time to post the exemptions to FEMA's rules on repatriation of foreign currency, in relation to me using your deed of gift idea, which i really appreciate. I'm wondering though where it also says in point 5, '...upto such limit as the Reserve Bank may specify', do you think i need to worry about that? & do you know what that limit is?

Kind regards TDK

Re: GOA - Buyer Beware!
 

Hi TDK,

It looks like a general caveat clause to me, as far as i know there is no stated limit.

It also appears that you could receive payment directly in foreign currency from the freeholder, but he may not be permitted to hold foreign currency of course.

I know, all you want to do is sell your bloody apartment (or to be precise the freeholders apartment):zzz:

regards
douglas

Re: GOA - Buyer Beware!
 

Hi again Douglas,

Thanks for your reply & analysis & sorry for the delay - just back from cooking lunch.

I also wondered about the fact that it states (under the exempt catagories), 'foreign exchange aquired by gift'. I very much doubt that the freeholder would gift me in sterling so i wonder if it could be interpreted to include Indian Rupees aquired by gift, that are later (before repatriation) converted into Foreign exchange:confused: Anyway the plot thicken......:)

Re: GOA - Buyer Beware!
 

Hi All,

Found this link titled: 'Essential advice for foreigners buying in Goa'

You have to scroll past the ads to read it all.

http://www.amberlamb.com/index.php/a...operty-in-goa/

Regards,
Remy

PS: Links now working.

Re: GOA - Buyer Beware!
 

Hi Remy,

A general warning, but not technically correct and incomplete. The period required to be spent in india by a FN in order to be deemed resident is 183 days not 182 (more than 182 days) and it is required in the tax year prior to the purchase, not the tax year of the purchase.

More importantly,the FN must contemporaneously have an intention to stay in india for an undetermined period of time. That is the more important aspect of residency and has to be proved by the FN to any authority who requires that proof. That is a very different requirement to the authorities having to disprove that the FN was resident.

This residency requirement is stringent and it is not just a case of doing your time, most FNs would fail it.

regards
douglas

Re: GOA - Buyer Beware!
 

Hi Douglas,

Totally agree.........however interesting to see 'warnings' now appearing here and there and recognition that there are scrupulous lawyers and developers out there encouraging FNs to purchase through the back door.

Regards,
Remy

Re: GOA - Buyer Beware!
 

Re reading the thread - Hi Simon,
Please help TDK and tell her how to repatriate her money. She and others have bought with their hearts, and are now on the verge of loosing everything.

Old man

Re: GOA - Buyer Beware!
 

Hi O.M. and many thanks for your request to Simon on behalf of myself and others in a similar situation.

However, just to clarify, whilst you could say i 'bought with my heart' in the sense that i never considered my property 'purchase' as an investment but purely to provide my sole private residence for personal use and, when vacant for friends and family to use.

However, i must stress i did do a fair ammount of research prior to entering into my Agreement of Sale in 05, and i intentionally insured i had residential status (& had spent well over 183 days in the previous tax year to my A.S. inorder to qualify for the freehold), so in that sense i also 'bought' with my head, although i admit in retrospect that i really should have delved deeper into the 'purpose/intention to stay' rule, although at that time things were alot more flexible and ofcourse if i'd known how the attitude towards FNs buying property in Goa would subsequently change so drastically (interms of visa restrictions, closing of the land registry to FNs, and the current clamp down/investigations etc), ofcourse i would never have touched it with a barge pole!

Regards TDK

Re: GOA - Buyer Beware!
 

Hi all,

On the property front, i have found the article below on indiamike and feel it is worth re producing.There are explanations of legal terms and practice contained in this article that may help FNs understand their agreements better.

Wannabee FNs please take note of the sections i have underlined apertaining to agreements to sale.


June 27, 2007

These are booming times indeed. Indians like you and me are planning to either buy a house for ourselves or are planning to sell an old house and move into a new one.

But do you know what your duties and responsibilities as a buyer/ seller are?

If you don't, then you are at the right place.

What is a sale?

A sale is one of the modes/ ways by which ownership of a property is transferred by one party to another for a price. The price can be either:

(a) Paid or promised to be paid

(b) Part-paid and part-promised to be paid.

This can be explained with the help of an example. Let's suppose X enters into an agreement with Y to transfer her/ his flat in Y's name for a consideration of Rs 10,00,000.

If Y pays the entire Rs 10,00,000 at the time of entering the agreement, the consideration is said to be paid.

If Y enters into the agreement and promises to pay the Rs 10,00,000 only when he has possession of the flat, the consideration is said to be promised to be paid.

If Y pays Rs 1,00,000 at the time of entering into the agreement and promises to pay the balance Rs 9,00,000 only on possession being given to her/ him, the consideration is said to be part-paid and part-promised to be paid.

What first time home buyers MUST know
In short, the word sale would mean complete transfer of all rights to the buyer of the property.

There are two parties to a contract of sale -- the buyer and the seller.

What property can be transferred/ sold?

Under a contract of sale, both movable and immovable property can be transferred. We are restricting this discussion only to the sale of immovable property.

Movable property

Movable property means all property except immovable property. For example, furniture, fixtures, goods like your mobile, laptop, etc.

Immovable property

Immovable property includes land, benefits that arise out of the land and things attached to the earth or permanently fastened to anything attached to the earth.

The various immovable properties that can be transferred/ sold include:

~ Land

~ Flat

~ Godown

~ Office

~ Show room

~ Flat, godown, office or showroom in a co-operative society

Who is a buyer?

Any person who buys or agrees to buy property for a consideration paid or promised to be paid or part-paid and part-promised to be paid is the buyer.

It is one of the essentials of a valid sale that the buyer must not be disqualified under any law in force even for the time being in force from acting as a buyer.

Any of the following persons can be a buyer:

1. Individual

2. Company

3. Partnership firm

4. Proprietary firm

5. Co-operative housing society

Who is a seller?

A seller is any person who sells or agrees to sell property for a consideration paid or promised to be paid or part-paid or part-promised to be paid. A seller should be competent to enter into a contract and make the sale. S/ he must be legally entitled and must have the right to transfer the property to the buyer.

How to avoid tax inquiries
Any of the following persons can be a seller:

1. Individual

2. Builder/ Promoter

3. Company

4. Partnership firm

5. Proprietary firm

6. Co-operative housing society

Rights of a seller (including those referred to in points 1-6 above)

Before completion of the sale -- ie, before ownership has passed to the buyer:

The seller is entitled to all the rent arising out of the property till the ownership passes to the buyer.

After completion of the sale -- ie, after ownership has passed to the buyer:

The seller has a claim on the property for the unpaid consideration (the money that is still not paid as per the agreement), when the property is in the hands of:

1. The buyer (this means the buyer cannot sell the property to a third party before clearing his unpaid dues to the person s/ he bought the house from).

2. Any person to whom the buyer has transferred the property without consideration (receiving money).

3. Any person to whom the buyer has transferred the property and who is aware of the non-payment of the consideration (balance amount).

Duties and liabilities of a seller

Before completion of the sale:

1. To disclose all material defects in the property or in her/ his title to the property.

2. To present, on the buyer's request, all the title deeds to the property in her/ his (ie the seller's) possession or in her/ his power.

3. On being paid all the amounts due, absolutely transfer the property to the buyer by entering into a final agreement with her/ him.

4. To take such care of the property and the title deeds of the property as an owner of ordinary prudence would take in the period between the date of contract of sale and the date of delivery of the property.

5. To co-operate with the buyer in completing the sale.

After completion of the sale:

1. To give possession of the property to the buyer.

2. When the whole purchase price is paid, the seller must deliver all the documents relating to the property to the buyer.

Various properties bought under a single agreement

1. Suppose a person purchases a number of properties as part of a single docment. Now if s/ he transfers the same to different buyers under separate agreements, then the purchaser of the greatest value is entitled to retain the (original) agreement / document.

Example: X is the owner of a flat and a shop in Cauveri Co-operative Housing Society Ltd. S/he had purchased both the properties under a single sale deed.

How the tax man keeps tab on YOU
The flat is valued at Rs 15,00,000 and the shop is valued at Rs 12,00,000.

Y purchased the Flat for Rs 15,00,000 and Z purchased the shop for Rs 12,00,000.

Since the price paid by Y is more than the price paid by Z, Y is entitled to retain the original sale deed through which X had acquired the flat and the shop.

2. When a person under a single agreement/ document purchases various properties and only few of the properties are then transferred to different buyers under separate agreements/ documents, then the seller is entitled to retain the (original) agreement/ document.

Example: In the above example, if Y had only purchased the flat for Rs 15,00,00, X would be entitled to retain the original sale deed.

Registration and stamp duty

Any instrument whose subject matter is any right, title or interest of the value of Rs 100 or upwards needs to be compulsorily registered as per the provisions of the Registration Act, 1908.

The above instruments also need to be stamped as per the provisions of the relevant Stamp Act.

Other modes of transferring property

Other than sale, immovable property can also be transferred in the following ways:

1. Mortgage

2. Lease

3. Exchange

4. Gift

Ankoosh Mehta is an advocate and solicitor with the Dikshit Maneklal & Company, Mumbai.

© 2007 Rediff.com India Limited. All Rights Reserved. Disclaimer | Feedback

Re: GOA - Buyer Beware!
 

Hi Douglas,
Thank you for the above.
So does that make an "Acron type lease" the only legal way of "transferring" property for FN's?
Does anyone know if a 5 year "roll over" type lease has ever been refused when coming up for renewal.
Anyone ever had a problem selling on their lease agreement ???
Regards
Bryson

Re: GOA - Buyer Beware!
 

Hi Bryson 7,

Fundamental point here, no transfer takes place on a freeholder offering a lease to a FN .

Do you mean refused by the freeholder at renewal, or the authorities?

Regarding problems selling, the leaseholder has nothing to sell. The whole system is based on the hope that a greater fool will pay massive amounts of money for a short term lease to the freeholder and that the freeholder will then transfer some of that money back to the original leaseholder. The psychology behind it is similar to a chain letter, but the payment system is less direct.

It is doubtful if rbi will continue to tolerate this practice of rollover, as with the participation of all concerned it effectively becomes a perpetual lease. FEMA was written to restrict the involvement of FNs in immovable property to a max of 5 years, that was done for a reason and the authorities do not like evasion or avoidance practices.

Once FNs start to trade these leases, it will be seen as stamp duty evasion and pseudo ownership and the authorities will act to prevent it.

There is also the problem of repatriation of the proceeds and tax avoidance on any profit.

regards
douglas

Re: GOA - Buyer Beware!
 

Hi all,
Some time ago i mentioned the possibility of a 90 day endorsment on tourist visas. At the moment brits still have 180 days max, but it looks like citizens of 18 countries will now have 90 day max according to this piece from indiamike.


Government of India has introduced a long term tourist visa with multiple entry for nationals of 18 countries
The countries which come under the new visa norms include france,germany,luxembourg,neth erlands, belgium, finland, spain, switzerland, norway,iceland, new zeland , japan , south korea , argentina, brazil, chile, mexico and vietnam
''the visa will have a five year validity with stipulation that continuous stay in India on each visit shall not exceed 90 days''

Re: GOA - Buyer Beware!
 

Hi Douglas

I don't think this is a new piece of legislation....I'm sure I remember reading it on Indiamike at the beginning of the year??

regards
Indiapurple