Despite slowing global economy, the real estate market in India has been a lucrative investment option for Non-Resident Indians (NRIs). Favourable exchange rate and improved transparency have positively impacted the NRIs sentiments. In our post titled What NRIs Need: Our Guide to Investing in Real Estate in India, we wrote about the documents that one needs while buying a property in India. But what about the documents while selling a property?
Coincidently, “What are the documents NRIs need while selling a property,” is also one of the most commonly asked questions that we get on Quora. So, we spoke to our legal expert and got the list of must-have documents.
To begin with, the documents required are not very different from those required by the citizens residing in India.
Let’s start with documents for identity proof.
An NRI, who wish to sell a property in India, must hold a passport. It is also valid for an Overseas Citizen of India (OCI) or a Person of Indian Origin (PIO). Since the passport is for identity proof, it may not necessarily be an Indian passport.
As a general norm, a Permanent Account Number (PAN) is mandatory for all large-scale transactions in India. Though several NRIs are not liable to pay income tax in India (their income is taxable in the country of their residence), they must furnish their PAN details to sell a property in India. It is primarily required at the time of sale of the property to claim tax exemptions.
What if somebody doesn’t have a PAN? Well, in that case, one can apply for one by sending the signed application form 49AA along with ID and address proof documents. Alternatively, an NRI can also furnish Form 60 in the absence of a PAN due to some unavoidable reasons.
Next, an NRI should have documents to prove their address in India as well as in the country of their residence. These include:
- Electricity or telephone bills
- Ration card
- Life insurance policy
The Sale Deed is executed when the final transfer of title passes from the seller to the buyer. While the Agreement for Sale gives one the future right to buy the property, the actual transfer of title happens only when one executes a Sale Deed with the seller. This is one of the key documents needed while selling a property to establish ownership.
Next, we have a letter of allotment from the builder, society, or any other relevant authority.
Documents from the society
NRIs must get a No Objection Certificate (NOC) from their society. This document is essential to confirm that the seller has no pending dues to society. Additionally, it also affirms that society has no objection to the sale of the apartment.
Wondering when to get this? Well, this is one of the last documents and can be obtained the buyer has finalised the property.
Further, a copy of the approved building plan and occupation certificate issued by the concerned authority is also required while selling a property.
Original share certificate
If the property is in a co-operative society, a share certificate issued by the co-operative housing society to each member is also required. The seller must give an undertaking that the property is not mortgaged. Also, he must publish a notice in the newspaper and in the society notice boards to confirm that no objections exist.
Lastly, an encumbrance certificate is necessary to assure that the property is free from all the legal dues.
A seller must keep all the property tax receipts handy. Also, if an NRI has been holding a property for a certain period and earning an income out of it, the transaction becomes taxable. In that case, keep the tax returns documents ready.
• Lawyer certificate
In the absence of originals of the above documents, the seller must approach a lawyer who would help him with a certificate to prove that he is the rightful owner of the property. The lawyer will do his due diligence and pull out a title report of the property in question. Once he is convinced, he will publish a public notice in English/Hindi newspaper and a regional language and wait for the set time to see if anyone is claiming the right over the said property. Once convinced, the lawyer would issue a certificate mentioning that the seller is the rightful owner of the property.
Further reading: NRI Corner: How to Get Home Loans in India