Guide to Do Registry of Immovable Property in India for NRIs

Importance of Registry of immovable property

Registry of immovable property in India is both a statutory and prudent practice that forms an eminent part in the sale of immovable property. Moreover, a registered document for an immovable property becomes a public document as it is available in the public domain and further provides a caveat to general people concerning legal rights and obligations arising or affecting the said property. Hence, registration ensures the prevention of fraud and misrepresentation of property.

It is important to stress that the onus for registry of immovable property under relevant legal regulations, lies on the buyer. Therefore, this article aims to appraise you with a registry of an immovable property categorically acquired by a Non-Resident Indian (NRI(s)).

Recommended reading: Model Tenancy Act For NRIs

Criteria for Non-resident Indian (NRI) for Registry of an Immovable Property

In layman language, an Indian citizen residing outside India for employment, business, studying, or any other stint, which reflects their intention to stay out of India for an uncertain period, is categorized as an NRI. However, the statutory status of Non-Resident Indian is defined under both Foreign Exchange Management Act 1999 (FEMA) and Income Tax Act 1961 (Income Tax Act) on two different concepts. As per the FEMA, the residential status of a person is determined on that individual’s intention to stay in India, wherein under the Income Tax Act, based on the number of days an individual stays in India. In a recent amendment under Finance Act 2020, the number of days to determine the status of NRI under section 6 (1) of the Income Tax Act has been reduced to 120 from 182 days.

Acquisition of Immovable Property

It is a common misconception that as an Indian Citizen, an NRI would be permitted to purchase any immovable property. Whereas, as per the Reserve Bank of India‘s (RBI) Master Circular on Acquisition and Transfer of Immovable Property in India by NRIs/PIOs/Foreign Nationals of Non-Indian Origin, an NRI is categorically prohibited from purchasing agriculture land/ plantation property/farm house land.

Transfer of Immovable Property

Although the purchase of agriculture land/ plantation property/farm house land is prohibited according to the aforementioned RBI Circular, but the transfer of the said land under existing or succeeding ownership of an NRI is permitted as per the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000.

Recommended reading: Steps to evict a tenant in India

Essence of Registration Act 1908

To better understand the registry of property, it is imminent to shed light upon the constitutional intention behind the enactment of the Registration Act 1908 (the Act) that the Apex Court has duly interpreted in the matter’, Suraj Lamp and Industries Private Limited (2) through Director Vs. The state of Haryana and another (2012) 1 SCC 656, observing that;

‘Registration Act, 1908 was enacted to provide orderliness, discipline and public notice in regard to transactions relating to property and protection from forgery of documents of transfer’.

Hence, a registered document becomes inviolable and can be used as documentary evidence before the Court of law.

Compulsory and Non- Compulsory Registration

To achieve the objective of the Act, mandatory registration is required for documents ascertaining sale, transfer of property other than testamentary instruments, for a value more than Rupees 100, and one shall bear the consequences for non-registration of such documents duly covered under section 17 of the Act, as observed by the Apex Court in Suraj Lamp case (supra).

It is pertinent to mention that transfer title and ownership also occurs through testamentary instruments, which are not mandatory to be registered. Therefore, as per section 18 of the Act, the following list of documents about a transfer of property shall not be compulsorily registered;

• Document of Past transaction
• Wills
• Grant of immovable property by the Government.
• Power of Attorney
• Agreement to Sell
• Agreement of Mortgage
• Certificate of Sale
• Counterpart of Lease
• Leases of immovable property not exceeding one year and leases excluded under section 17 of the Act

Recommended reading: Gift Deed

Consequences for Non-registration of Purchased Immovable Property

Given the above, it is abundantly clear that registration of documents to purchase the property, under the Act is mandatory. Therefore, opting out of the same will bear an individual legal injury by;

• Invalidating the document’s legitimacy to consequent any transfer of title, interest or ownership vested in a property.
• Invalidating the document’s evidential value for any transaction affecting such property before the Court of law.
• paving the way for fraud and misrepresentation due to lack of record in the public domain.

Registration Fees

The buyer of immovable property is bound to pay some registration charges, as revenue to the Government according to the relevant sections under the Act. According to the Act or the respective State Registration Act, these charges vary in each state. A particular percentage of the saleable value of the property is calculated as a registration charge. It should be noted that the consideration amount for stamp duty and the registration fee is based on the ‘guidance value’. The guidance value depends on the location of the subject property and is decided by the State government.

Recommended reading: Succession Certificate

Time Limit for Registration

The time period for a mandatory document for the registration is within 4 (four) months from the date of such execution. If the said timeline is not abided, it can still be registered within the succeeding 4 (four) months on penalty up to 10 times of registration fees.  Even on expiry of 8 months from the date of execution of such document, if the parties desire to register the same, they can annex such document with a deed of confirmation with a duly paid stamp duty at current market value.

It is always prudent to duly get a mandatory document for registration, registered in 8 months from the execution of a document. However, if the said timeline expires, it is recommended a fresh document of the said expired document shall be executed between the parties. As such expired documents are first adjudicated through the collector and then are registered by the Joint Sub-Registrar, which can be time-consuming.

In an event, the vendor dies after signing the document with pending registration of such document, in such case, it is challenging to complete the formality of registration within a statutory time limit or during the additional time limit of 4 months. In such a scenario, the legal heirs of the deceased can be impleaded to comply with the registration formalities for registry of an immovable property in the following manner;

• An application can be filed before the Hon’ble Court for probate and/or a suitable order that authorizes one of the legal heirs to represent for and on behalf of the deceased vendor before the registrar to complete the registration.
• Prepare Deed: A deed of fact stating all the facts including the demise of the vendor. This deed is to be duly signed by the concerned purchaser and all the legal heirs or one legal heir representing the others, of the vendor. This deed of along with the death certificate and NOC from the legal heirs of the deceased, shall suffice for the registration of the document in question.

Recommended reading: Process of Partition Lawsuit

Stamp Duty

Another common misconception with the registration process is the confusion between stamp duty and registration fees. First and foremost, the stamp duty and registration fee are paid under two different statutory acts, i.e. The Indian Stamp Act, 1899 and the Indian Registration Act, 1908, respectively.  Furthermore, both the said acts do not specifically deal with the same subject matter, even though the said acts may be read together. Therefore, the definitions contained in one of the acts might be accepted in considering the question under the other.

It is pertinent to note that stamp duty is levied over the instrument and not the transaction. Further, the relevant stamp duty is not decided over the apparent nature of an instrument, but on the substance of the instrument.

The scope of stamp duty is quite vast and is duly decided by the respective State Governments under their statutory rules or amendment to the Indian Stamp Act 1899.

Registration Process for a Purchased Immovable Property by an NRI

All the documents in relation to immovable property shall be presented for registration in the Sub registrar’s Office within whose sub-district the whole or part of the said property is situated. The officer may, on its discretion, attend at the residence of any person who desires to deposit any document entailing transfer or sale of property for registration.

All the documents for the sale or transfer of an immovable property would require proper representation before the Sub-registrar in the following manner;

• the buyer and seller of the subject property
• representative or assignee of such buyer or seller who is authorized by power of attorney executed and authenticated

Registration of all the documents for the sale or transfer of an immovable property would require the authorized signatories for the seller and the buyer, along with two witnesses. Furthermore, the said signatories shall have proof of identity, for example, Aadhar Card, PAN Card, duly registered and executed Power of Attorney (in case of other representatives) or any other document issued and recognized by the Government. In addition, it is also pertinent to submit the property card, original documents and proof of payment of stamp duty on the instrument for transfer or sale to the sub-registrar for successful registry of immovable property.

The State Governments post amendment in 2001, have progressed from the physical safe custody of records connected with registrations in any district and a digital recording of prescribed books for registrations in computer diskettes, floppies or any other electric form. Therefore, many States seek for a copy of the Sale Deed, or any other transfer instrument as a physical record and maintain a subsequent electronic record for the said instruments for the public domain.

Recommended reading: Property owner search

Implementation of an Instrument

It is a common practice to assume that if an instrument doesn’t indicate the date of its operation, then it becomes effective from the date of its execution rather than from the date of its registration. Therefore, the date of registration has no bearing on the implementation of an instrument.

Conclusion

In view of the above, the following can be deduced;

• That an NRI can only purchase immovable property other than agriculture land/ farmland, though he/she can transfer an agriculture/ farmland that is in his/her existing ownership or has owned through succession.
• That it is mandatory to register documents/ instruments compulsory under section 17 of the Registration Act 1908, which does include documents in relation to the purchase of immovable property.
• That it is not mandatory to register testamentary documents through which an immovable property may have been transferred or is to be transferred.
• The timeline for registration of a document or instrument is 4 months, and on expiry of same, an additional 4 months are provided.
• That opting out of registering the mandatory documents for registration, may delegitimize such documents and further render such documents futile in the eyes of the Court of law.
• Stamp duty and registration fees are two different forms of tax levied by the State government and are further the consideration amount for the same are governed under the State government rules and regulations.
• That the registration process is a tedious process that requires submission of certain prerequisite documents to the Sub Registrar’s Office.
• The implementation of the instrument is inferred by the date of execution and not the date of registration, provided no date of implementation is mentioned under a document.

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