INDIA Law and Practice Contributed by: Vivek Chandy, Archana Tewary, Kumarmanglam Vijay and Brijita Prakash, JSA
• laws applicable to acquisition, transfer and regis - tration of immovable property; • building by-laws and zoning regulations; • Indian exchange control laws for foreign investors; • corporate laws; • taxation laws; and • succession and inheritance laws. 2.7 Soil Pollution or Environmental Contamination The buyer will not be deemed liable for soil pollution or environmental contamination if they can prove that they were not responsible for it. In most large trans - actions, buyers/investors conduct technical due dili - gence including soil testing to rule out such issues. The buyer is also indemnified against any action initi - ated by the government for contamination of a proper - ty prior to its purchase. Proceedings for environmental contamination are very infrequent, although this may change as environmental issues are attracting more recognition. Approvals are issued with respect to the property and pass along with the property to the buyer. Presently, the seller/buyer has no disclosure obligations towards environmental authorities. However, the owner/devel - oper of the property is required to submit periodic reports to authorities confirming compliance with environmental approvals and renew them periodically. 2.8 Permitted Uses of Real Estate Under Zoning or Planning Law The buyer can ascertain permitted uses of property based on zoning regulations/maps issued pursuant to state-specific town and country planning statutes. To aid the development of strategic areas, the govern - ment may allot land with certain obligations imposed on its development. Development agreements typi - cally seen in the private sector are not common for lands owned by public authorities. In certain cases, governments award concession agreements for development of land for specific purposes. 2.9 Condemnation, Expropriation or Compulsory Purchase The Indian Constitution no longer recognises the right to hold property as a fundamental right. However, Arti -
cle 300 (A) was included in the Constitution to affirm that no person would be deprived of their property except by authority of law. State governments are authorised to acquire lands for public purposes. The current land acquisition statutes prescribe: • payment of compensation up to four times the market value in rural areas and twice the market value in urban areas; • safeguards for tribal communities/other disadvan - taged groups, compensation for lost livelihood, caps on acquisition of multi-crop and agricultural land; • return of unutilised land to landowners; and • the requirement to obtain affected parties’ consent for land acquisition for companies, except where the acquired land is controlled by the government. Land parcels acquired by state governments vest with the governments free of all encumbrances and any title defects. 2.10 Taxes Applicable to a Transaction Any transfer of property requires the payment of statu - tory duties, including stamp duty, cess and registra - tion fees (which differ from state to state). Where the asset is under construction, GST is also paid by the seller, which can be recovered from the buyer by the seller. In asset transfers, the buyer generally pays duties, unless otherwise agreed. Most stamp acts provide that where there is no agreement to the contrary, stamp duty will be paid by the purchaser on sale and by the lessee on lease. For share transfer transactions, stamp duty at 0.015% of the consideration is payable. In some states, stamp duty at rates applicable to a sale is not paid if property is contributed into a partnership firm. However, any exit from the partnership by the original contributor will usually attract payment of stamp duty as if it were a conveyance.
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