Q: I am a NRI (non -
resident Indian) living in Singapore. I am planning to buy a flat in Tambaram
near Chennai city in my Sister's name. She is a state government employee.
Since she is not eligible to get home loan from any bank or HFCs (housing
Finance Companies). I am planning to pay full settlement (About Rs. 40 lacs) in
cash. Will there be any issues in future
?
Ans: Your a NRI in
Singapore. You have stated that you wants to buy an apartment in your sister’s
name by sending the cost of Rs. 40 lacs by way of remittance from Singapore.
In the first
instance, you should decide whether you wants to send the money as your
outright gift or / as interest free loan to your sister. Both are permissible
as per the provisions of FEMA (Foreign
Exchange Management Act) and also there will not be any IT ( Income Tax)
implications in respect of both the options.
If you wants to give it as a gift to your
sister, you may have to execute an affidavit to that effect & get it
notarized at Singapore and send it to your sister for her to show it to the
concerned authorities.
You can not say that
you are buying the flat for yourself, but the same will be held in your
sister’s name. In other words, you can
not buy the flat in the name of your sister by treating her as your benami, since holder that is prohibited as per Indian laws.
If you wants to treat
it as a gift to your sister, then subsequently, the property will go to your
sister absolutely & thereafter to her legal heirs only like her husband
& children. It will not go back to you unless your sister in turn settles
the property in yours favour after sometime by executing a deed of settlement.
On the other hand, if
you wants to treat it as interest free loan to your sister, then you should
workout with your sister a convenient
scheme for payment of the loan through monthly / annual instalments.
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