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- Is
the leave and licence agreement
generally signed in multiples of
11 months or 12 months? Is there
any stipulation of time?
- Can
premises already encumbered to a
bank be leased out to a Company
with a high deposit and in case
of a default who holds the first
lien? And will the Company/Occupant
be evicted?
- Is
registration of a Leave and Licence
mandatory and what are the consequences
if the same is not registered?
- How
do I determine the property tax
on the rent received as I have given
the premises on higher rent to a
Company? Are there any guidelines
set by the BMC?
- The
society refuses to give us NOC for
leasing the apartment on leave and
licence basis without payment of
past dues which are in litigation?
Would occupation by the occupant
create more trouble for him and
me?
- What
is the difference between lease
and leave and licence agreement?
- Do
I need permission of the Society
to keep a Paying Guest and are there
any extra society outgoings I need
to bear?
- I
have a flat which I want to sell
and buy a new flat which will be
bigger in area. What are my tax
implications especially with regard
to capital gains?
- When
a flat is gifted to a daughter what
are the legal implications regarding:
i) Title- and how is this established.
ii) Gift tax- is it leviable and
if so when?
- Is
it safe to give ownership flat for
leave and licence? What are the
problems if I give for a longer
period?
- How
can we evict tenants who do not
pay or have made changes in their
flats?
- Can
foreign citizens of Indian origin
acquire commercial properties in
India?
| Q. |
Is the leave and
licence agreement generally
signed in multiples of 11 months
or 12 months? Is there any stipulation
of time? |
| Ans. |
Formerly leave and licence agreements
used to be signed in multiples
of 11 months or 12 months. After
The Maharashtra Rent Control Act,1999
came into force from 1.3.2000
there is no stipulation as to
whether leave and licence agreement
should be in multiples of 11 or
12 months, and there is no stipulation
as to total time period.However
Leave and licence agreement generally
does not exceed three years. |
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| Q. |
Can premises already
encumbered to a bank be leased
out to a Company with a high
deposit and in case of a default
who holds the first lien? And
will the Company/Occupant be
evicted? |
| Ans. |
Yes premises already encumbered
to a bank can be leased out to
a Company with a high deposit.
However you may require the No-Objection
of the bank. If the deposit monies
are with you and in case if you
default on payment to the bank,obviously
you will continue to hold the
deposit money. The Co./occupant
can be evicted only if there is
a provision to that effect in
the lease Agreement. |
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| Q. |
Is registration
of a Leave and Licence mandatory
and what are the consequences
if the same is not registered?
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| Ans. |
As per Section 55 of the Maharashtra
Rent Control Act,1999 registration
of Leave and Licence Agreement
is compulsory and it is the responsibility
of the landlord to ensure registration.
If the same is not registered,
the landlord would be prosecuted
and on conviction he’s subject
to upto three months imprisonment
or be subject to fine not exceeding
Rs.5000/- or with both. Further
in the absence of a Registered
Agreement, the contention of the
tenant, about the terms and conditions
on which the premises have been
given to him by the landlord shall
prevail unless otherwise proved.
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| Q. |
How do I determine
the property tax on the rent
received as I have given the
premises on higher rent to a
Company? Are there any guidelines
set by the BMC? |
| Ans. |
The calculation of property
tax on rent cannot be generalized
and depends on various factors,
but however if the premises are
rented out to banks, companies,
multi-nationals, etc. who are
exempted from the provisions of
the Maharashtra Rent Control Act,1999
by virtue of Section 3(1) (B)
of the Act then the rates of property
taxes could be as high as 60%
or so. If the premises are rented
out to others, who are protected
under the Rent Act, the Mumbai
Municipal Corporation cannot charge
taxes on the actual rent and have
to base their taxes on Standard
rent defined under the Act, which
is, in most cases lower than the
actual market rent. |
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| Q. |
The society refuses
to give us NOC for leasing the
apartment on leave and licence
basis without payment of past
dues which are in litigation?
Would occupation by the occupant
create more trouble for him
and me? |
| Ans. |
If the society is not giving
you its No-objection and you still
give your flat out on leave and
licence, the society could file
a suit against you and the licencee
and take legal action. |
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| Q. |
What is the difference
between lease and leave and
licence agreement? |
| Ans. |
Lease is defined under Section
105 of The Transfer of Property
Act,1882 and a lease of immoveable
property is a transfer of a right
to enjoy such property for a certain
time or in perpetuity on consideration
to be rendered periodically or
on specified occasions, while
a licence is defined in Section
52 of the Indian Easement Act,1882
and it does not create any interest
in the premises in favour of the
licensee excepting a mere right
to use and occupy the premises
for a limited duration. Both documents
have now to be registered. A lease
deed is required to be stamped
and registered. However the stamp
duty payable on lease is more
than on Leave and Licence for
a period upto three years. For
a period exceeding three years
the stamp duty is same for both
agreements. The implications of
entering into a lease agreement
would be: i) That stamp duty would
have to be paid ii) That the document
would have to be registered iii)
That Municipal taxes may go up
iv) Of course, Income-tax would
have to be paid on your income;
and v) The question of Wealth-tax
would have to be considered. One
property is exempt from Wealth-tax.
However, if you have any other
property, this implication would
have to be considered. |
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| Q. |
Do I need permission
of the Society to keep a Paying
Guest and are there any extra
society outgoings I need to
bear? |
| Ans. |
Yes, you need permission of
the Society for keeping a Paying
Guest. It depends on the Society
bye-laws and rules. Some Societies
keep asking for extra outgoings
by way of Non-Occupancy charges.
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| Q. |
I have a flat which
I want to sell and buy a new
flat which will be bigger in
area. What are my tax implications
especially with regard to capital
gains? |
| Ans. |
On the proposed sale of your
flat you may purchase another
flat within two years of the date
of sale of the original flat.
If you have invested the entire
amount of capital gain irrespective
of your area of the flat, you
would not have to pay any capital
gains tax. |
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| Q. |
When a flat is gifted
to a daughter what are the legal
implications regarding: i) Title-
and how is this established.
ii) Gift tax- is it leviable
and if so when? |
| Ans. |
If one has gifted a flat to
his daughter one should have the
gift deed drawn out which should
be witnessed by two persons. In
case of both the donor and the
donee it is preferable to register
the said gift deed even if the
flat is in a co-operative society.
Stamp duty would have to be paid
on the gift deed which would be
the same as in case of the sale
of a flat. However, there is no
gift tax applicable. The gift
deed would be the title document
indicating the gift to the daughter
along with the share certificate
if it is in a co-operative society.
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| Q. |
Is it safe to give
ownership flat for leave and
licence? What are the problems
if I give for a longer period?
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| Ans. |
Yes, it is safe to give ownership
flat for leave and licence provided
an agreement has been entered
into to that effect and the same
leave and licence agreement has
been registered with the Competent
Authority under the Maharashtra
Rent Control Act,1999. |
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| Q. |
How can we evict
tenants who do not pay or have
made changes in their flats?
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| Ans. |
Yes, you do require permission
from the landlord for taking separate
water connection, tank etc. |
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| Q. |
Can foreign citizens
of Indian origin acquire commercial
properties in India? |
| Ans. |
Yes. Under the general permission
granted by Reserve Bank properties
other than agricultural land/farm
house/plantation property can
be acquired by foreign citizens
of Indian origin provided the
purchase consideration is met
either out of inward remittances
in foreign exchange through normal
banking channels or out of funds
from the purchasers' NRE/FCNR
accounts maintained with banks
in India and a declaration is
submitted to the Central Office
of Reserve Bank in form IPI 7
within a period of 90 days from
the date of purchase of the property/final
payment of purchase consideration.
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