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V Nagarajan: Individuals receiving gifts over Rs50,000 should pay tax
December 11, 2017
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My father has not left any Will prior to his death in Gulf and had bank accounts. He had immovable assets in India as well. How does the succession issue would apply legally in both the countries? Please clarify. Harish, Dubai
In your case, if there is a dispute between legal heirs then you will have to approach a competent court having jurisdiction to settle the dispute. Moveable assets will be transferred depending on the inheritance/succession laws of the country where your father was domiciled at the time of death. As regards immovable assets in India, Indian law of inheritance/succession would apply there.
 
I am gifting my immovable property located in India to a close relative living in India. Is there any tax impact on this transaction? Biju Nair, Sharjah
Any gift in excess of Rs50,000 received by an individual will be taxed. In case of immovable property, the value will be based on the stamp duty value of the property. If the property is gifted without any consideration then if the stamp duty value exceeds Rs 50,000, stamp duty value will be taken for registration purposes.

I am owning land in prime area in Hyderabad and intend entering into a joint development agreement with a developer. What are the precautionary measure to be taken while entering into an agreement? Raghu Reddy, Abu Dhabi.
There is no harm in giving to a developer for joint development as it is the ideal in the current market scenario. With the enactment of RERA, the developer will be transparent and will have to comply with rigid regulations.

However, a word of caution! You will have to choose your joint venture partner with greater care and investigation as the market has experienced joint venture developments taking much longer time and in some cases the landowner made to fend for themselves. It is necessary that you should join hands with a reputed developer who has a track record in implementing projects and has the requisite resources to withstand any financial crisis.

Moreover, you should ensure that he has the capability to market and exit the project within the scheduled period. You should consult a lawyer and incorporate the clauses necessary to protect your interest in the project. You should also ascertain the exact contribution and the extent of ownership in joint investments.

Notes

FDI Up 17 per cent


Foreign direct investment (FDI) in the country increased by 17 per cent to USD 25.35 billion during April-September this fiscal. “FDI equity during the current FY 201718 (up to September) surged by 17 per cent to $25.35 billion from $21.62 billion in the year-ago period,” the DIPP said on its ‘Make in India’ Twitter handle. The department of industrial policy and promotion (DIPP), under the commerce and industry ministry, deals with FDI related issues.


It said that the total FDI into India including equity inflows, reinvested earnings and other capital stood at $518.10 billion during April 2000 to September this year.

The main sectors which attract foreign inflows include services, telecom, trading, computer hardware and software and automobile. Bulk of the FDI came in from Singapore, Mauritius, the Netherlands and Japan.
 
Foreign investments are considered crucial for India, which needs around $1 trillion for overhauling its infrastructure sector such as ports, airports and highways to boost growth.
 
A strong inflow of foreign investments will help improve the country’s balance of payments situation and strengthen the rupee value against other global currencies, especially the US dollar.
 
From 2000 to 2014, NRI investments in Indian real estate reached substantial levels ranging between 10-18 per cent annually. However, when the residential market began to slow down in 2015, the NRI investment fervour into this asset class began to cool off a bit.To top it off, there was a slew of reforms and policy changes such as demonetization, RERA and GST, the combined effect of these being a decrease in NRIs’ investment in the sector, according to ANAROCK Property Consultants.
 
 The highest impact was in the residential real estate market — which, for a long time, was the primary focus of NRI investors with their interest skewing towards apartments and villas, followed by plots and other property typologies.
 With the residential real estate sector showing no clear signs of revival until recently, there was a distinct shift of well-heeled NRI investors’ focus towards commercial properties as this sector now delivers very satisfactory yields.

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The author is a business analyst
covering Indian property markets
 

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