Kochhar & Co.
Can anyone (including foreigners) own and occupy real estate in your jurisdiction (including shares in property owning companies)? Are there any restrictions?
No. Acquisition of real estate in India by foreigners is regulated by the Foreign Direct Investment (FDI) Policy and the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000 read with Foreign Exchange Management (Non-debt Instruments) Rules, 2019.
Typically, foreign companies who have established a branch, office or other place of business for carrying on any activity in India, (excluding a liaison office which is allowed to take property on lease for a period of 5 years) may acquire an immoveable property which is necessary for or incidental to carrying on such activity.
In India FDI is not permitted in an entity which is engaged or proposes to engage in Real Estate Business. Real estate business means dealing in land and immovable property with a view to earning profit there from and does not include development of townships, construction of residential/ commercial premises, roads or bridges, educational institutions, recreational facilities, city, regional level infrastructure and Real Estate Investment Trusts (REITs) registered and regulated under the SEBI (REITs) Regulations, 2014.
Further, Foreign Embassy or Diplomat or Consulate General resident in India are permitted to purchase or sell real estate within the country. However, citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Hong Kong or Macau or Democratic People’s Republic of Korea (DPRK) are not permitted to do so without prior permission of the Reserve Bank of India. Nonetheless, they are permitted to take a property on lease for a period not exceeding 5 years.
Are there restrictions on lending for the purchase of real estate by foreign companies? If so briefly give an outline?
There are no restrictions on Indian banks to lend to a foreign company for the purchase of real estate. However, foreign companies cannot directly purchase real estate in India. Only a foreign company establishing a place of business in India through an Indian subsidiary set up as per the FDI policy, can acquire any immovable property in India, subject to it being necessary for or incidental to carrying on such business activity.
Buying
Please provide a short summary of the fees and costs (including tax) relating to buying real estate in your jurisdiction.
When buying real estate in India, it is usual to undertake conveyancing searches at the office of the local registrar, utility providers and property specific searches. These are carried out before the exchange of contracts and closing. Goods and Service Tax (GST) (a form of sales tax) may also be payable on commercial real estate if the same is under construction. Further, stamp duty and registration charges are also payable, the amount of which varies from state to state and is contingent upon the value of the agreement.
Additionally, in the event a long-term perpetual lease (usually for the duration of 99 years) is executed with the government, the government may levy certain transfer charges. Such leases are typically granted for industrial properties.
Owning
Are there taxes applicable to owning real estate and can the burden of the taxes be passed to someone else (e.g. a tenant or an occupier - not being the owner)?
Typically, in India the primary obligation for payment of the requisite tax on real estate is on the landlord. However, parties may contractually agree that the tenant/occupier of the property can reimburse those costs to the landlord for the duration of occupancy of the property.
Tax Breaks
Are there tax breaks or other incentives for foreigners to buy real estate in your jurisdiction? If so what are they?
There are no tax breaks or other incentives given to foreigners who purchase real estate in India.
How is the ownership of Real Estate evidenced in your jurisdiction?
In India, land ownership is primarily established through a registered sale deed such as conveyance deed, lease deed, relinquished deed, and gift deed. However, there is no document specified under Indian law which is specifically earmarked as a title document. Further, there is no central repository for land records and the archaic methods of documentation are still prevalent.
Generally, a document which confers the title over an immovable property should be registered with the concerned registrar of assurances. However, in certain cases it is possible that the title is derived from an un-registered document as well.
Thus, a due diligence is carried out broadly to ensure that the property is indeed in the name of the person claiming a right over it, is free from liens, mortgages and encumbrances, that the property tax has been fully paid up to date and that the property is not engaged in any legal conflicts.
Is it possible to keep the identity of owners of real estate confidential in your jurisdiction?
No. It is not possible to keep the identity of owners of real estate confidential in India as when a real estate document is registered, the same becomes a public document which may, as mentioned hereinabove, be viewed at the requisite registrar’s office upon payment of fee.