What is mutation of property and why it is important for buyers?

What is mutation of property & why it is important for buyers

From a buyer’s point of view, it is imperative that the property he intends to buy has a clear and undisputed title. The onus to verify the title of the property is on the buyer. It requires well-maintained land record/municipal records where all the past transactions related to the property title are duly recorded. It is possible if mutation is done diligently.

There are certain documents which establish property ownership:

  • Registered documents transferring the title, e.g. sale deed
  • Survey documents
  • Land records
  • Property tax receipts

Apart from the registration of documents, there is mutation also, which reveals the owner of the property. Registration is a proof of ownership, but mutation is essential as it records the ownership with the authorities.

What is mutation?

Mutation means entering the name of the owner of the property in the revenue records maintained at the local level by the State. Whenever a property is transferred,i.e. there is a change in the ownership, the name of the new title holder is reflected in the revenue records when mutation is done.

The Government maintains the record as the same enables the authorities to tax thereal property owner.

When is mutation required?

Mutation is required whenever there is a change in ownership effected by:

Is it necessary to get the mutation done?

There are two types of mutation:

  • Mutation of agriculture land
  • Mutation of non– agriculture land

In case of agriculture land, mutation is necessary as the title passes to the new owner, only after mutation. If the Government acquires such land, the compensation is paid only to the person who is the owner as per land revenuerecord.

In case of non-agriculture land, the title of the owner is not affected if mutation isnot done. However, for payment of municipal tax, electricity connection, waterconnection, mutation becomes necessary.

How is mutation done?

An application is made to the Tehsildar with court fee stamp affixed on it. The documentation and fee for mutation differ from State to State.

What is the importance of mutation, especially for a buyer?

Since the onus to verify the title of the property is on the buyer, mutation is of greatsignificance to him. It is essential to get the mutation done because:

  • The Government looks into the land records to verify the actual owner for imposing taxes and for awarding compensation.
  • Mutation shows possession of the property.
  • Mutation is vital for further sale of the property.
  • Mutation helps to prevent the fraudulentsale by seller to more than one buyer.
  • Mutation helps the buyer to ascertain that the property is free from    encumbrances or if there is any liabilityto be incurred by him. 

However, mere mutation does not confer any title. Mutation is invalid if the document transferring the title is not registered as required in law.

It is important to note that mutation is not a onetime process. It needs to be doneregularly to ensure that the property record is clear.

It is always advisable to take legal help from lawyers to effect any transfer of property to avoid legal ramifications later and to ensure that all legal formalities are complied with. Lawyers can provide legal advice and assistance in case of mutation or for cross-checking the revenue records in case of purchase/sale of any property.

Rules for selling immovable property in India and repatriation of sale proceeds

Rules for selling immovable property in India and repatriation of sale proceeds (1)

Real Estate investment and later selling property acquired in India by NRIs have always been a significant area inviting many queries. RBI governs sale and purchase of property by NRIs under FEMA (Foreign Exchange Management Act), 1999. RBI grants general Permission for property transactions by NRIs in India, and in some cases, specific permission of RBI is required. The rules and regulations have been simplified and made investor friendly

NRIs may want to sell the property as it is difficult to maintain if there is no plan to visit India or rent out the same and burden their family friends for payment of property tax, maintenance charges and other municipal dues

A Canadian Citizen who had inherited a property in India wanted to sell his property here in India and repatriate the sale proceeds. We answered the queries as follows:


Read: Sale of property in India by NRIs


Which property can be sold and to whom

  • Any property can be sold to a resident Indian – residential or commercial whether purchased, inherited or gifted.
  • In case the buyer is NRI – any property except agricultural land, plantation property and farmhouse.

Repatriation – It is a vast topic, but here we are confining ourselves to repatriation of sale proceeds only.

Sale proceeds can be legally and safely remitted through proper banking channels. Asset bought in India can be sold if they are purchased confirming to all the rules and regulations of foreign exchange. Once the property is sold, the next step is to repatriate the funds abroad:

If inherited/gifted -property is sold

  • The sale amount is deposited in NRO account. Repatriation is allowed up to USD One million per financial year. If remittance increases US dollar one million in a financial year, permission of RBI is required.
  • If the property has been inherited from a person residing outside India, special permission of RBI is needed.
  • NRIs can acquire agricultural land in India only through inheritance, and the same can be sold only to a resident Indian.

If the purchased property is sold:

a. The property was purchased while being a resident Indian

  • The sale proceeds are credited to NRO account and remittance from NRO account is allowed up to USD One million in a financial year after payment of tax.
  • The repatriation, in this case, is allowed only if the property is held for 10 years. If not, the sale proceeds are held in NRO account to complete 10 years.

Read: Can you sell your share of an Inherited Property?


b. The property was purchased as NRI

  • If the property was purchased using money resources in India (loan from bank or family friends) – sale proceeds are credited to NRO account. Repatriation limit is the same as in point a. Permission from RBI is required if remittance is more than that.
  • If the property was purchased on loan, repatriation is allowed up to the loan repayment amount made through NRE/FCNR accounts or remittance of foreign currency through banking channels.
  • If the property was purchased using foreign currency funds from NRE /FCNR account, the maximum amount of repatriation could be the foreign currency equivalent of the amount paid for the purchase.

In such case, repatriation of the entire principal amount is done without any restriction subject to the condition of repatriation of two residential properties only — no limit for commercial properties. Capital gains/profits are deposited in NRO account and are repatriated subject to condition of USD one million per financial year.

The repatriation limit applies to one person per financial year.


Read: Property rights of daughters Under Hindu Law in India


Documents required for repatriation of sale proceeds:

  • Certificate from Chartered Accountant – Form 15 CB
  • Certificate from income tax department – Form 15 CA
  • Application in a bank for foreign exchange
  • Proof of inheritance in case of sale of inherited property
  • Document proving sale

It is always advisable to hire a lawyer to ensure proper documentation and smooth repatriation of sale proceeds.

Tax implications on a gifted property

Gifting a property is a kind gesture, and it is better to be aware of tax implications for gifting a property.

We had a case where Mr Bhushan, an NRI was gifted with land situated in India by his father, a resident Indian. He wanted to know:

  • If a land in India can be gifted by his father who is a resident Indian
  • The legal requirements to complete this gift transaction
  • Tax implications

Our advice and guidance – Parties to a gift deed:

  • Donor (giver)
  • Donne (recipient)

Donor or Donne can be a Resident Indian or an NRI or a PIO.

Which property can be gifted: Any movable or immovable property like –

  • Land /Building
  • House
  • Jewellery
  • Shares and Securities
  • Paintings, Drawings, Sculptures – Any other work of art
  • Archaeological Collections

Agricultural Land, Farmhouse and Plantation Property in India cannot be gifted to NRI.

Legal Requirements for gift deed:

A gift is a voluntary transfer of movable or immovable property without consideration, by a donor to donne which is accepted by the donne during the lifetime of the donor. For a gift deed, we require:

  • Donor – voluntary transfer
  • Donne – acceptance of a gift
  • Property to be gifted in existence
  • Gift deed preparation
  • Registration of gift deed

Tax Implications:

Both Donor and Donne are charged with the payment of tax as per Income Tax Act, 1961, under certain conditions mentioned as below. Tax is levied in the year in which the gift is received.

Tax Implications

  • Any rent received by the Donor on a gifted property is added to his income for tax purposes.
  • For calculating Fair Market Value and Stamp Duty Value, it is better to take advice from a tax consultant

Exemptions from tax in case of Gift:

  • If the aggregate value of the gift is less than Rs 50,000
  • Gift received from the relatives (list of relatives provided in the Income Tax Act) – No tax irrespective of the value of the gift. In the case of Hindu Undivided family, all members are relatives.
  • On Marriage of the recipient
  • Gift received by will or inheritance
  • From local authority
  • From Charitable Trust/Find/Institution as per the provisions of the Act

Sale of property in India by NRIs

Sale of property in India by NRIs

Once you have made up your mind to sell your property, you need to decide whether you want to visit India to sell your property or you want someone else on your behalf to sell your property in India.  In case your relative or a friend or a broker/advocate can do the same for you, it will be done through a Power of Attorney for sale of the property. POA can be executed from abroad also.

Secondly, hiring a lawyer for sale of property helps to put your documents in place so that you do not face any legal problem while selling your property.

Who can buy the property if the seller is NRI?

NRI can sell any residential/commercial property in India. Buyer can be an NRI or a resident Indian, but in case of agriculture property, the buyer can be a resident Indian only, although NRI can acquire agriculture land through inheritance.

Which property can be sold?

The property acquired by NRI by way of purchase/gift/inheritance, all can be sold.

General precautions and safeguards for every seller:

1. Ensure that you have a clear title – Title means you have the legal ownership of the property and the right to sell the same. The title is ensured by possessing the relevant document showing the ownership with the seller. Title verification is crucial to provide the hassle-free sale of the property.

2. Relevant documents in possession – NRI must possess a valid passport as identity proof and a PAN card.

Buyers through their attorneys insist for the documents which establish the ownership of the seller and to ensure that the seller has all the relevant documents in possession to facilitate a smooth sale of the property.

Some of the documents are Sale deed, land records, tax receipts, Mother deed, Encumbrance Certificate, Building Approval plan, Completion certificate, Letter of allotment, Society documents etc.

3. Approval of local bodies: Local bodies/Municipal Corporations which have jurisdiction over the area where the property is located, issue occupation certificate and approved building plan. These are also relevant documents as property with buildings erected without approval from local bodies is considered as a property with the latent defect which can jeopardise the selling plans of the seller.

4. Tax implications – There are certain tax implications for selling property in India. If the property is sold within three years of acquiring it, profits earned are considered as short-term capital gain and taxed as per the slab rate. If the property is sold after three years of acquisition, the profits are long-term capital gains and taxed at a flat rate of 20% after indexation. Owners can claim exemptions in case of long-term capital gains. Buyer deducts TDS.

5. Repatriation – NRIs can repatriate the sale proceeds to the country of their residence subject to conditions. The sale proceeds shall not exceed US dollar 1 million in a financial year. Repatriation is done through official dealers/NRE/NRO accounts. Permission of RBI is required if the property sold was inherited from a person resident outside India.

6. General tips for sale: Seller must ensure that there is:

  • Proper valuation of the property
  • Correct pricing as per Market trends
  • Effective Advertisement of sale

Hiring a lawyer for selling the property to avoid disputes and litigations and to ensure proper documentation

7. Hiring a lawyer to prepare a sale deed – The last leg of the sale process is preparation a sale deed/Agreement to sell. A good advocate well versed with the property matters must be engaged to prepare this vital document which evidences the sale of the property. Sale deed has to be registered as per the applicable laws of registration.

8. Legal Advice for sale of property: NRI must be guided by a legal expert for sale in India so that he is saved from fraudulent property dealers and sale is made appropriately with proper documentation.

Reserve Bank of India issues guidelines for acquisition/sale/tax/repatriation in case of property matters of NRIs under the name Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, which are amended from time to time.

Why and where to invest in property in India

real estate investment

Real Estate investment has always been a lucrative option. It still attracts a lot of investors for building on wealth as it promises good returns. Real Estate covers:

  • Housing sector
  • Retail
  • Hospitality
  • Commercial

Indian Real Estate sector is also a good option for NRI investors as there is a lot of scope and potential for growth in a large number of Indian Cities.


Read: Increasing Benefits of Property Investment in India


There are many factors which influence Real Estate Investment Decisions:

  • Political Stability
  • Infrastructural growth
  • Connectivity of a place to airports and other major cities
  • Government Policies in General and Particular for the area – ease of business, transparency, speedy disposals of proposals etc.
  • Tax benefits
  • Quality of Life – Basic Amenities, Education and health facilities
  • High paying jobs – more beneficial for investment in the housing sector
  • Migration – Inflow of people
  • Prospects for future development
  • Emotional bonding with hometown – the special reason for many NRIs as they want to create an asset in their hometown to settle down after they come back to native place
  • Affordability

When it comes to choosing cities for Indian Real Estate Investment, Delhi, Mumbai, Chennai and Kolkata has always been a favourite. They have had their share of growth and development. There is saturation in the property market. The possibility of future growth is limited.  Now their periphery area is attracting investors, eg. Navi Mumbai.


Read: Investment Options for NRIs


Recently, the Tier II Indian cities are attracting real estate investment, as:

  • Government’s efforts: Indian Government’s Smart City projects under which they aim to develop Tier II cities by providing core infrastructural facilities, a decent quality of life and clean environment besides smart solutions. Economic decisions like GST and regulatory authority like RERA which has brought transparency and accountability are also boosting investment.
  • Property is available at affordable price and high Rental Income
  • Improving Infrastructure, health facilities and educational institutions
  • Migration

List of top most Indian Cities for Real Estate Investment with reasons:

  1. Bangalore – Infrastructure, Connectivity, IT sector induced demand
  2. Chennai –Rising demand due to fast-growing economy (manufacturing, health, automobile, technology sector), Affordable property rates and good rental rates.
  3. Mumbai – areas like Thane and Navi Mumbai enjoy proximity to Mumbai, Employment Opportunities, and demand for residential accommodations.
  4. Pune- Lot of migrants in the IT sector has drawn steady demand for further investment
  5. Hyderabad – Presence of IT employees raises demand in housing and retail sector, Connectivity to Airport and State Government facilities for investors
  6. Kochi – Government’s initiatives like single window clearance, discounts to NRIs for investing, better infrastructure, educational Institutions drawing migrants, all are leading to property sector growth.
  7. Ahmedabad – Employment Opportunities, Improved Infrastructure, demand for houses, Transparent and easy procedures
  8. Bhiwadi – City is catching up for Investment. Proximity to Gurgaon and International Airport, IT sector presence, Affordable prices, Infrastructure are an advantage.
  9. Thiruvananthapuram – Growing IT sector, City’s tourism potential, Infrastructure, Healthy Lifestyle.
  10. Coimbatore- City is close to many tourist destinations, upcoming infrastructural facilities, growing service sector including IT firms, Flourishing manufacturing and retail industries.

Read: Government Initiatives and NRI Investments in India


In case of NRIs, besides, the monetary reasons, emotional connection with their hometown for settling down in the future is also a major factor which drives their real estate investment decisions.

Indian Real Estate holds a lot of promises for good returns on investment.