Power of Attorney and its relevance to NRIs

A property transaction through Power of Attorney executed by NRI

involves additional checks/scrutiny. A sale deed may be declared
NULL and VOID due to a little mistake or error within the execution
of Power of Attorney by NRI. Generally these errors/mistakes are
intentional and most of the times unintentional. In recent past,
multiple cases were where in a property transaction was challenged
based on error/mistake in the execution of Power of Attorney (POA)
by NRI. In several cases, the standing of NRI is being hid by his
lawyer/CA in POA to avoid TDS. An NRI executing POA in India
cannot declare his/her standing as Resident Indian. A buyer or seller
in India ought to mention the status of another party in sale deed to
avoid any future tax disputes. A case of the false declaration in sale
deed might not place the concern of concealment of facts on the
resident Indian within the property dealings.

What is a Power of Attorney?

POA is a legal document authorizing somebody else to represent
an individual and perform bound acts or functions on once behalf.
In legal terms it is a written document within which one person
(the principal) appoints another person to act as an agent on his or
her behalf, so conferring authority on the agent to perform bound
acts or functions on behalf of the principal.

Types of Power of Attorney

Special PoA: In a special PoA, the power of the
agent is restricted and limited to a specific purpose. A
special POA may be transaction specific and the POA
ceases on the completion of transaction.
 General PoA: Under a general PoA, broad powers
are granted to the representative to make decisions on
behalf of the principal. Besides, the representative can
also carry out the various activities on behalf of the
principal without any limitation on transactions.

Durable PoA: A durable POA remains effective for a lifetime, unless it is

explicitly cancelled. A specific clause can be inserted in the document, stating that
the representative’s power would remain valid even if the principal becomes
incapacitated.

How Power of Attorney can be executed in India

If an NRI is present in India, he could before going abroad execute the POA from India itself.

Step 1: The NRI needs to get the desired matter of the POA drafted and typed on non-judicial stamp
paper of adequate value which is generally Rs 100.

Step 2: Along with the legal representative and two witnesses, the person is now required to visit the
Sub-Registrar’s Office.

Step 3: It should be ensured that all the persons going to the Sub-Registrar’s Office are carrying their
valid identity proof. Photocopy of the POA, along with the original copy, must also be taken along.

Step 4: At the Sub-Registrar’s office signatures, photographs and fingerprints of the party will be
collected.

Step 5: Now, you need to collect the registered POA on the due date from the Sub-Registrar’s Office.
This might take three-five days after the formalities have been completed.

Reason for Execution of Power of Attorney

As i mentioned and being candid about my opinion. A resident Indian buyer should AVOID property
transaction through Power of Attorney holder of an NRI. The best case scenario is the presence of an NRI
seller in India for execution of sale deed. Sometimes the circumstances do not permit so a buyer you
should check the reason for the execution of Power of Attorney. The reason should be reasonable and
logical. If the buyer is convinced with the reasoning, then he should insist that NRI Seller should include
this particular reason, in Power of Attorney. In short, the purpose/reason for the execution of a power of
attorney should be clearly mentioned in the Power of Attorney.