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V Nagarajan: A ‘Will’ does not require compulsory registration in India
May 21, 2017
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Exclusive to The Gulf Today

My relative has left a ‘Will’ bequeathing his immovable property in India. However, I understand it has not been registered. Is registration of Will compulsory? Jayasuresh, Abu Dhabi.
A ‘Will’ does not require compulsory registration but it is certainly a safer option and should be chosen to avoid needless controversy. A ‘Will’ may be presented for registration or deposited at any time. It does not require registration within four months of execution as is required in cases of other documents. You can present it even after the death of the testator.

I wish to gift residential property to my relative in India. Does it require registration? What are the tax implications? Please clarify. Sadanand, Dubai.
In general, gifts to close relatives are exempt from tax, but any income earned from such gifts could be clubbed with the income of the giver. Gifting immovable property to close relative should be accompanied with a registered gift deed. Registration is compulsory to make the gift complete. Once the immovable property is registered along with a gift deed, your relative will get the legal ownership and right to possession to such property. There is no gift tax while gifting immovable property to a close relative. You can gift your property without any upper limit.

Our family members are investing jointly in residential and commercial properties in India. For tax planning purposes, is it sufficient to specify the percentage of ownership in the purchase deed? Abhishek, Sharjah.
It is advantageous to invest in property in joint names as tax benefits will accrue to all. What is required from the point of tax planning is to ensure that the rental income received is not in the name of one person but more than one family member.

 
The purchase should be made jointly from their respective funds. You should also ensure to clearly define the percentage of ownership of each co-owner in the purchase deed and also do ensure that each co-owner makes investment in the property equal to his or her share in the property.

Notes:

With 2016 being the year of landmark decisions for the Indian real estate industry, the sector saw concerted efforts by the Government to bring in transparency as well as boost consumer sentiment in the sector, especially in the residential market. In 2017, the office sector is likely to maintain its momentum with an anticipated absorption of 40 million sq. ft., according to CBRE’s Asia Pacific Real Estate Market Outlook 2017 India.
 
Residential Market India residential supply has jumped up by 70 per cent q-o-q in Q1 2017. Compared to only 18,000 units launched in Q4, 2016, more than 30,000 units were launched in Q1, 2017.
 
The biggest jump was in Chennai, Hyderabad, Kolkata and Bangalore. India’s housing sales have also jumped up by 70 per cent q-o-q in Q1 2017. Compared to only 14,000 units sold in Q4, 2016, more than 23,000 units were sold in Q1, 2017. Housing sales are expected to revive in 2017 both in primary and secondary market and affordable housing, which is witnessing increased interest from private developers, will emerge as a key driver of housing sales.
 
Retail Outlook
 
The year 2017 is likely to be positive for the retail sector which is likely to witness an increased quality supply. Demand for organised retail space will continue to exceed the supply.
 
Consumption patterns are likely to mature due to increasing urbanisation with upcoming retail developments to allow entry points for global retailers beyond the traditional epicenters of Delhi NCR and Mumbai. REITs will enable development of better quality malls and discourage strata-sale of properties. Implementation of GST would lead to rationalisation of tax at different levels with expected improvement in ease of doing business and movement of retail goods.
 
Large private equity firms and nonbanking finance companies are now getting interested in affordable housing, thanks to the government’s recent incentives for this segment, including infrastructure status and speedy approvals. So far, this segment was financed by funds with smaller ticket size which specialised only in affordable housing.
The government has been pushing affordable housing in its bid to achieve ‘Housing for All by 2022’ and the efforts are showing with money flowing into this segment.

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The author is a business analyst
covering Indian property markets

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