TAX LIABILITY ON TRANSFER OF IMMOVABLE PROPERTY

Income derived from the transfer of immovable property is termed as Capital gains and is taxable. For computation of capital gains firstly there must be a capital asset, the capital asset must be transferred and there must be gain or profit on transfer of the capital asset. Immovable property, vacant land, commercial property, agricultural land situated within the jurisdiction of notified areas are all capital assets. However personal effects like furniture motor vehicles and stock in trade for business do not fall under the ambit of capital asset. Gift, bequeath to beneficiary of a 'WILL' or partition of Hindu undivided family also do not constitute transfer of property. The profit derived from the transfer of immovable property is the difference between the amount spent for acquisition and improvement of the property and the sale consideration received by the seller of the property. The excess amount over the expenditure is the Capital gain.

There are two types of capital gains. If the immovable property is held for 3 years or less the property is known as short term capital asset. The profit / gain arising out of transfer of such property is known as short term capital gain. If the immovable property is held for more than three years it is called long term capital asset and the profit / gain arising out of sale of such a property is known as Long term capital gain. The capital gain is computed on the basis of sale consideration of immovable property which is reflected in the absolute registered sale deed. The sale consideration may be money or money's worth or both. If the transfer of property is effected by way of exchange of capital assets than the consideration amount will be the fair market value of the asset.

According to the Finance Bill 2002 Section 50 (C) the guidance value fixed by the State Government for purpose of payment of stamp duty and registration charges will be the market value of the property and will prevail over the agreed consideration depicted in the sale deed, if the agreed consideration is less than the guidance value.

The cost of transfer of property comprises of stamp duty, registration charges, brokerage and legal charges, besides the cost of the property. If the property of a undivided Family is acquired vide partition deed, the cost of acquisition is deemed to be the cost at which the previous owner acquired the property. The same principle applies to a property acquired by way of gift or bequeath made to the beneficiary of a "WILL". Any amount expended by the previous owner or the present transferor on improvement of the property like additions, alterations etc. will also constitute as cost of acquisition. In the case of properties acquired before 1981 the assessee has three options.

Cost of acquisition to be the amount expended by the previous owner or the amount expended by the present assessee or fair market value as on 01-04-1981.

Short term capital gains is the profit / from the transfer of short term capital asset. The expenditure incurred by the seller to get the property transferred and the cost of acquisition is deducted from the sale consideration received by the seller. The net balance thereafter is the short term capital gain. The short term capital gain is added to the sellers income and the income is taxed on slab basis. However the seller is entitled to deductions and rebate under Chapter VI A and Section 88 respectively.

In the case of long term capital gains, the capital gains is added to the cost of Inflation Index resulting in offsetting the inflation. As per the I.T. Act the financial year 1981 is taken as the base year for cost of Inflation Index and has been assigned 100 points which is subject to increase every year.

To compute the Indexed cost of acquisition, indexed cost of improvement the cost of acquisition / improvement should be multiplied by the cost of Inflation Index of the year of transfer of the property and then it should be divided by the cost of Inflation Index of the year during which the property has been acquired.

There are some exemptions available for long term capital gains as follows.


a) If one residential house is transferred and another residential house is purchased within one year before or two years after transfer of the original house.
b) If a residential house is constructed within 3 years after transfer of the original house.
c) Both the properties must be residential house properties.
d) The house / flat so purchased should not be transferred for a minimum period of 3 years.
e) The exemption amount will be the amount invested in the new property or the long term capital gain whichever is less.
f) The exemptions are available to Individuals and Hindu undivided family.

The capital gain arising out of transfer of property should be deposited in the capital gains account in designated branch of a nationalised Bank. The amount should be deposited before the due date for filing return of Income. Two types of capital gain accounts can be opened with the Bank. Capital gains Account No.1 and capital gains account No.2. Both these accounts are a replica of the savings Bank account and fixed deposit account. All the rules applicable to the Savings Bank and Fixed deposit accounts are applicable to Capital gains accounts. The interest will be the same as is applicable to Savings Bank and Fixed deposit accounts. The difference is in the nomenclature of the accounts and no loan will be granted against capital gains account No.2. The amount deposited in the capital gains accounts has to be utilised only for the construction or purchase of a residential property within the stipulated period. The amount deposited in capital gains account No.1 is to be used from time to time to meet the cost of construction of the house / flat. Cash withdrawls from capital gains account No.1 is restricted to a maximum of Rs.25,000/- at any given time. Any withdrawal above Rs.25,000/- at any given time will be vide a demand draft drawn in favour of the beneficiary. Amount from Capital gains Account No.2 can be transferred to Account No.1 as and when required on submission of request for transfer in the Banks standard form. Request for withdrawal of cash from Account No.1 is to be made on the Banks standard form. No bills receipts are to be submitted to the Bank. However the assessee will give a declaration on the Banks standard form as to the purpose of withdrawal of cash / application for a demand draft. Tax will be deducted at source on interest earned in both accounts for the financial year.

As the capital gains is required to be deposited in the capital gains account only before the due date for filing the return of Income, the intervening period may be used for investing the capital gain in Fixed Deposits of a nationalised Bank. In case the assessee does not want to purchase or construct a residential property, the capital gains amount should be deposited in a nationalised Bank, Nabard or rural electrification bond for a period of three years. As per I.T. Act the house purchased or constructed should be independent residential unit. However it is pertinent to note that an assessee can purchase more than one flat in the same building and claim aggregate cost of the flats purchased.

Last but not the least proof of Capital gains account should be filed along with the return of Income.

GUIDELINES FOR ACQUIRING A RESIDENTIAL PROPERTY

With a robust economy the real estate market across India remains upbeat. The focus at present is shifted to acquiring residential property. The demand for Apartments has raised manifold in metropolitan cities. This trend has also percolated to towns.

The metropolitan cities like Delhi, Bangalore, Bombay and Chennai are swamped with builders. Apartments have spring up in every nook and corner of cities like mushroom. With the liberalisation of the economy, the real estate market is expected to remain stable atleast for the next few years.

With the real estate on a roller coaster there is hectic construction activity in both cities and towns. Builders are making hay while the sun shines. The concept of independent houses have given way to apartments with emerging nuclear families. Apartments seen to be the choice of the working couples and the builders have lift no stone unturned in on the concept of nuclear families choice. The builders package their apartments with several services to keep in tune with the demand. The amenities offered is a swimming pool and a club house. The builders have started looking beyond these amenities and are competing with each other in offering a host of other amenities like 75 percent of landscape devoted to nature, a health spa, an entertainment centre and even an amphitheatre.

Some of the housing complexes are provided with jogging tracks, squash court, a gymnasium and Jacuzzi. The builders also ensure that retail shops are opened within the complex or situated near by. The Banks have also stepped into the real estate market by offering home loans with reasonable rate of interest. With a rude range of amenities available to the buyer it is of paramount importance that an ideal location and reputed builder is identified by him. In the case of an independent house the right contractor should be identified who has adequate experience in the lien of construction. The contractor may be given full contract or the construction of the house can be on the basis of labour contract.

Before the buyer intends purchasing an apartment / site it is incumbent on his part to give more impetus to the location.

The following guidelines may be considered before the buyer chooses an ideal location.

The property intended to be purchases should not be within the proximity of slums, drainage line, place of worship or entertainment centres like cinema theater. It should be a residential area with cosmopolitan outlook. It should be ensured that the property is not located in a commercial area. The location should not be far from schools, office, markets, educational institutions, hospital, railway station and Banks. It may be arduous to get all these facilities near your location but it should be ensured that most of them are available near the location.

The apartment / site to be purchased should be in a layout approved by the competent authority with well laid roads and drainage system. To the extent possible the property to be purchased should not be situated in a low lying area to avoid during the monsoon. The buyer should also ascertain about regular water supply power and availability of parking space. Last but not the least the concept of Vaastu should be given its due importance.

The statutory authority has notified the following norms for purchase of apartments.

Owners should have documents specifying right over undivided share of land, built up area and proportionate share in common area. Only a registered document indicating the above parameters has legal sanctity and confers full ownership.
Buyer should check whether promoter / developer has registered the scale and other agreements with the sub Registrar Office.

Occupancy certificate from the local body.

IN the case of G.P.A. holders, whether the Power of Attorney is in vogue and the G.P.A. has the relevant powers.

Whether the building has violated the building plans.

Whether there are any outstanding dues and whether the relevant deposits for electricity and water have been paid.

Whether building has fire service clearance.

NOC from Airport authority if it is near the Airport.

Property has to be registered with the sub Registrar. Transaction will be deemed incomplete if the G.P.A. status is not conferred since it can be cancelled at any point of time.

Apartments built under co-operative societies have to be compulsorily registered. Stamp duty need not be paid through stamp paper above but it can be done through demand draft or pay order as well. Do not buy a residential property in a hurry and repent at leisure.

THE DIFFERENT FACETS OF EMERGING ECONOMY

The growth of Indian economy has been characterized more by hyperbole than the results for the common man and the poor. The year 2007 may be a watershed moment for the economic growth of our country with the G.D.P. projected at 9%. Keeping pace with the new age developments the past few years have seen rapid economic growth. Rapid economic growth and the existence of millions of poor people in India have exemplified our country as a land of contrasts. India is a land of collisions between the past and the present. Two decades back though the economic growth was slow, it was poor oriented. It ushered in a green revolution which led to agricultural growth and community and rural development which alleviated the problems of the poor. But the benefits of the present rapid economic growth have not percolated to the poor and the common man. The rate of decline in poverty has not kept pace with higher growth. There is no denying the fact that 60 percent of the Indian population depends on agriculture. Agriculture alone accounts for more than 20 percent contribution to G.D.P. However the budgetary allocation is grossly low when compared to the other sectors. Though the government has emphasized on increased credit facilities to the rural population engaged in farming, Banks are fighting shy to provide loans to more than 50 percent of the farmers. Bank's apathy, non remunerative prices and poor rural infrastructure like irrigation, ware housing and transport has added to the woes of the farmers. Farmers were deprived of fair prices for their produce resulting in their indebtness and large number of suicides. Ironically most of the suicides were from agricultural advanced states of Maharashtra, Karnataka, Andhra Pradesh and Punjab.

India is a land of contrasts where there are some who invest lakhs and crores of rupees on an apartment or have the right to splurge in a licentious way while others are content and happy at being able to pay Rs.25/- for a square meal. The satisfaction at the macro economic situation gets camouflaged with the stark fact that nearly 77 percent of our population earns an income of Rs.20/- per day. The inequalities in human development have an adverse impact on the lives and capabilities of the people. The two faces of India should converge for a sustainable growth and bring about a social harmony in the country. The states of Bihar, Madhya Pradesh, Gujarat, Maharashtra and U.P. have accounted for 75 percent of the country's rural poor.
Poverty can be eradicated only by significant investments in health, human resources, education, and infrastructure. Investments in social infrastructure will provide the common man and the poor with access to employment opportunities. I believe that education is the catalyst that generates human resource and it is considered as the most effective weapon to fight poverty. In the eyes of the common man there are two Indias - an India which is focusing on generation and accumulation of wealth and the other on eradicating poverty. With the economic boom and the bullish share market wealth is cornered by only a section of the population. The inequalities in human development have adversely impacted the life and capabilities of our people. The two faces of India should converge for a sustainable economic growth to create decent employment opportunities which will not only eradicate poverty but will build a strong foundation for political and social stability.

It is high time the ground realities are accepted to rectify and address the crisis. India's phenomenal growth rendered in figures in graphs and bulletins appears to be a fairy tale. The government claims that the revenue collection during the present financial year is the highest when compared to the earlier periods.

The direct tax collection during April, December 2007 of the current financial year at Rs.164 crores is a whopping 42 percent higher than what the government collected in the corresponding period last year. Corporate tax contributed Rs.98391 crores. In order to widen the tax net and broaden the tax base the government is roping in new payers besides introducing new taxes like fringe benefit tax, securities transaction tax, banking transaction tax and service tax. It is reported that the securities transaction tax at Rs.5895/- crore was 74 percent higher than last year. The government claims to have brought down Inflation to 3.5 percent which is based on wholesale Index. It is not based on a reality check. The consumer price Index and the retail price of commodities are always on the rise which has deprived the poor and the middle class people from realizing their rightful aspirations. Unfortunately channeling the revenue for development projects and ameliorating the sufferings of the poor is bogged down by political avarice and bureaucratic cupidity. This has culminated in the rise of crime and passion which is finding expression in a stressed urban and rural scenario.

In public perception substantial revenue is wasted on non developmental expenses for running bloated government machinery which has no or little value to the common man. We are a democracy and hence it is imperative that the law of equity is given its due importance to narrow or bridge the gap between the abysmally poor masses and the well to do minority.

The economic gains can be felt only if the money spent on developing projects translates into a better standard of living for the poor and the common man. The government needs to realize that evolution of democracy should be out of the free will of the people and it cannot be imposed on them. It is for the people and by the people.

THE ECONOMIC GROWTH VIS-A-VIS SAVINGS RATE

The post Independence India saw our nation as frugal despite the fact that India was considered as a country of thrifty individuals. Though by and large the people were thrifty the savings rate remained static. This was so because the house hold savings was mostly invested in land and gold. Investment in land was mostly considered as a source of livelihood. Investment in gold was in consonance with the Indian tradition. As there was no generation of employment opportunities the savings rate among the individuals remained static. The savings rate then was comparatively lower to the rates of developing countries. The savings rate which was about 10 percent during 1950 showed a marginal increase of 5 percent in 1971. The new age development has ushered in economic growth since the past few decades. It has seen the magnificent resurgence of India after decades of poverty even at the middle class level. Encouraging economic growth has thrown up a few magical tricks and turned a bleak situation into a bright one. With the economic growth picking up there was a spurt in the savings rate which stood at 25.5 per cent in 1995. Since then there was no looking back. With a robust economy the savings rate spiraled to 32.4 percent in 2005-06. Consequently the per capita income also rose considerably.

With the advent of I.T. revolution and globalization services led growth has brought about phenomenal increase in the employment of the educated. The Industry which is reported to be employing 1.3 million people has a revenue growth potential of about 25 percent. Globalization has culminated in massive technological growth. The IT Industry and the BPO deluge offering high pay and perquisites have become a blessing and bane to the present youth. In contrast to the old socialistic system we have emerged into a society that is money oriented. Public have become more status conscious and money obsessed. With more money supply there is sharp rise in savings rate. Today the house hold savings is about 70 per cent of the aggregate savings, despite the consumption splurge. With the increase in income of the individuals, the consumption among the Nouveau Riche and the younger generation has catapulted. According to the Max New York Life 81 percent of Indian house holds have savings but only 51 percent deposit in Banks. This is so because there are other avenues for parking their savings with better returns like in Real Estate, Gold and to a certain extent even in Share Market. Substantial amount is invested in real estate which is presently at its pinnacle. However real estate boom depends on demand and supply and also the government policy. Hence such investments are not devoid of risk. It was envisaged that a faster growth in producing capital goods will entail in the savings rate increasing appreciably. With globalization and post liberalization boom the Indian markets were exposed to the foreign consumers abroad. This led to phenomenal increase in exports of garments, leather goods, carpets, rice, shrimp etc. India is today considered as an economic power house with the growth of economy projected at 9 percent. Apart from the house hold savings the corporate sector is reported to account for 60 per cent increase in private corporate savings. The reduction in wasteful expenditure at the Central and State Government level also contributed to the increase in the savings rate which was conspicuous by its absence a few decades back. With the appreciable increase in the savings rate which presently stands at 32 percent despite the spending splurge by the individuals, shopping has turned out to be an established national pastime in India. Retail outlets have given way to shopping malls. The right to splurge in a licentious way has become a way of life. Despite the substantial savings rate individuals in service sectors have gone berserk about material acquisition.

How ever the disturbing trend is the economic slow down in US which are a cause of worry for the global economy. The US economic slow down is expected to hit the software exports to the Banking Financial and Insurance sector in US. If the impending recession in US turns out to the full blown, it will impact the I.T. Industry severely so much so the annual growth in software exports may reduce from 30 per cent to 20 per cent. This in turn will have an adverse effect on corporate savings. The rupee appreciation against the dollar has added to the woes of the exporter. There is also an apprehension that a full blown recession in US will result in US cutting, spending and slashing outsourcing to India. All this means the job opportunities will fall drastically and consequently the savings rate will go for a tail spin. Coming events cast their shadows. This is best exemplified by the downward trend in the share market which has shed 4000 points within a span of few months. It is a known fact that the bulk of the investments in share market comes from foreign Institutional investors who sway the share market. As a result of the slow down of economy in US due to sub prime crises the foreign Institutional Investors have started pulling out their investments from the share market. The subprime crisis in US is as a result of non repayment of mortgage loans by the borrowers. The fall in the share market has resulted in retail and corporate investors loosing crores of rupees.

Fortunately for India the foreign exchange reserve is high at $283 billion. Since India's economy is robust foreign Institutional Investors are expected to reinvest in our share markets sooner or later.

The need for prudence and austerity in spending by the individuals and corporate sector will go a long way in sustaining the present growth in savings rate.

DRAFTING AND OBTENTION OF PROPERTY DOCUMENTS

Before I deal with drafting of the documents it is incumbent on the part of the purchaser of a residential property to ensure that a suitable property is identified in a residential area. In view of the traffic snarls especially in metropolitan cities it is important that proximity to educational institutions, office, market, hospital and public conveyance should be given top priority. After prioritizing the amenities documentation should be considered. Before an absolute sale deed is prepared, an agreement to sell the property should be entered into by the seller with the purchaser. The agreement to sell is governed by the provisions of the Transfer of Property Act 1882 and also the Indian Contract Act 1872. The agreement to sell can be executed on a stamp paper of Rs.200/- denomination.

In Karnataka state in view of the stamp paper scam the use of stamp paper issued by the government department for execution of Absolute sale deed is prohibited. The government has notified that a white paper or Rs.2/- document sheet issued by the Department of Registration will suffice for preparing the document. Apropos the stamp duty the same has to be paid either by way of a demand draft, pay order or a Banker's Cheque in favor of the concerned Sub Registrar. The registration charges have to be paid vide a demand draft or cash to the concerned Sub Registrar. The Sub Registrar will enter the details of the stamp duty paid and registration charges on the reverse of such deed which will be in lieu of the acknowledgement.

Documentation:
The document is compartilised into several parts. In terms of priority it starts with the name and description of the documents. It is followed by the contents of the document which eventually decides the nature of the document. The date and place of the execution of the document will be depicted in the beginning of the document. Normally the date of the document may differ from the date of registration. However the documents should be presented for registration within four months from the date of execution failing which it will attract heavy penalty. Hence the date and place of execution is absolutely necessary to be stated to determine the limitation period and the jurisdiction. The names of the seller and purchaser with their respective age and father's name should be mentioned in the document besides their place and residence. In the case of a married woman her husband's name should be mentioned.
In the case of joint ownership of property due diligence should be exercised in the executing the documents as one of the parties to the contract. In case the party to the contract acts for himself or on his behalf / their behalf or is represented by others, in any other capacity, then it should be specifically mentioned in what capacity he / they are being represented. The intention of the party and the rights and obligation of the parties should also find its place in the document in a chronological order. The document should mention the nature of transaction viz whether it is an absolute sale of property or an agreement to transfer only the right, title and interest. The mode of consideration paid and balance amount of consideration payable if any, as well as the duration of the transaction should be mentioned in the document. Most importantly the covenant of the vendor (seller) as regards clear and marketable title to the property should be indicated in the document.

Possession:
As per the transfer of Property Act possession is the most important aspect of the transaction. It is incumbent to mention in the document the time of delivery of possession of the property. The seller need not give possession of the property until the full consideration amount is paid by the purchaser and receipted accordingly by the seller. The sale of the property must be completed in all respects. The document should specify the mode of possession of the property viz. vacant or rented. If the said property is rented the seller should arrange for a rental agreement between the existing tenant and purchaser of the property. If the purchaser insists on vacant possession the seller should get his tenant, vacated within a period mutually agreed upon by both the seller and purchaser. In view of the legal hassles and time involved in this regard the purchaser normally prefers vacant possession of the property and until then no sale process is completed.
In terms of Section 21 and 22 of the Indian Registration Act it is mandatory to mention the following details of property in the document.

Location and description of the property with the measurement, municipal number, street name, boundaries and details of surrounding properties. In the end the document should state that it is being signed by the executants in the presence of two witnesses. The advocate or a licensed document writer should also sign the document. On Completion of documentation and before the sale process is completed the purchaser should apply for encumbrance certificate in respect of the said property from the Sub Registrar's Office. The encumbrance certificate should be for a minimum period of 13 years prior to registration of the property in the purchaser's name. The encumbrance certificate should indicate that the said property is in the name of the seller. In case of mortgaged property the name of the financer will be indicated in the encumbrance certificate. After the sale deed is registered in the purchaser's name, it is advisable to get an encumbrance certificate indicating the purchaser's name.

Thereafter the purchaser should apply and obtain Katha / Katha Certificate in his / her name. The documents will indicate the House number / door number and the actual measurement of the property based on which the Corporation / Municipal tax will levied.

The purchaser should also obtain mother deed / original documents and latest tax paid receipt from the seller before the process of registration is completed. The mother deed / original document give legal sanctity to the previous ownership and also ensure clear and marketable title to the property. All documents must be kept safely by the purchaser.

STRESS AND LIFE STYLE

In the wake of the economic boom people are under constant and tremendous pressure to perform at their work place, culminating in a highly stressful life poor health, burnouts and families falling apart. Factors causing stress are either psychological or physical strain. Psychological stress is determined by mental reaction to pressures and problems around us. Just like in the case of phobia if the stress is recognized half the battle is won. A change in the life style with a positive outlook to life can bust stress and physical strain. But unfortunately the life style adopted by the Indians has boosted the stress level in them. The resultant stress has taken epidemic proportion so much so the working couples hardly find time for their family.

Take the case of a working couple. The couple is enmeshed in an engineered life of their own with no time to spare for their child. The child is left to himself and consequently is beset with pathological symptoms and abnormal behavior. The whooping salary of the parents does not propitiate the child who is languishing in his own world. The bond between the child and parents which was precariously hanging on a tenuous thread eventually snaps. This in turn ends up in interminable spats between the couple. They realize that there is a stark contrast in all their views likes and dislikes. The situation further aggravates and the couple seeks divorce on grounds of incompatibility. What they fail to understand is that marriage is an institution which has stood the test of time over the last several decades. They need to know that life is not a contract or a business. Divorce is synonymous to trauma which leaves an indelible mark on the couple as years pass by the divorced people will notice the void in their life and realize that they are avoided even by their relatives and friends. They find themselves in isolation and will peter away with the society bulldozing them into the thinking that divorce is the be all and end all.

There is a strong case for deep reflections on whether this growing trend is conducive for societal health. Materialism and neo modernism following the western world blindly has brought about the change in the lifestyle. The Indians are found beholding the western pastures by adopting a fast life at the cost of their family. By following the western world Indians have descended into a certain navel gazing at a time when they are required to make their life style a metaphor for deeper transformation and not merely treat them as catalysts of change. Despite the life expectancy rising, Indians are indulging in life style which is not conducive to a healthy life. It is high time necessary action is taken to stem the rot and salvage the decadent and moribund. We fail to understand the value of living. We are in the rat race and never introspect and do a correction to bring harmony in our lives. We need to take a stock of our lives and look at our problems in a holistic way instead of reacting like a school boy hurt and running away from responsibilities. With a robust economy we have to be aware of the challenges faced by our life style to maintain our impressive sojourn. We need to envisage a radical change in the life style that cocks a snook at the Indian tradition and culture.

All human beings have naffs and the spirit of every man and woman is bestowed with both beauteous as well as bestial aspects. The unity of being oneness is the core of belief. We need to abnegate the stressful life for an emotionally satisfying and a peaceful and harmonious coexistence.

To quote J. Cyle "The best of all monopoly profits is a quiet life".

MOHAMMEDAN WILL

My article on Hindu Will was an insight into what you needed to know about the Will. This article deals with "Mohammedan Will".

In Mohammedan Law a "WILL" is known as Wasiyatnama. It is a legal declaration of the intentions of a Mohammedan, regarding disposal of his property after his demise. The original "WILL" is in Arabic language which was later translated by some Mohammedan lawyers. It is reported that Mr. Charles Hamilton translated the original WILL from Persian language to English. The authority on Mohammedan WILL is Hedaya, which means guide. Shaikh Burhan-Ud-din-Ali composed the Hedaya.

Any Mohammedan of sound mind and who is not a minor can bequeath his property by WILL. A Mohammedan is deemed to be a major on completion of 15 years of age. Section 3 of the Indian Majority Act 1875 stipulates that a person shall be deemed to have attained majority when he shall have completed 18 years of age. However it was known that a Mohammedan who has completed 15 years of age before the Indian Majority Act 1875 came into effect is competent to make a valid WILL for bequest of his property. Unlike a Hindu WILL a Will made by a Mohammedan may be oral. In the case of a written WILL no particular form is prescribed. A written WILL is not mandatory. It can be a verbal declaration. What matters is that the intention of the testator (maker of the WILL) should be sufficiently established. Another contrast between a Hindu WILL and Mohammedan WILL is that in the case of the later a written WILL need not be signed. It need not be attested as well. However for the sake of ambiguity and to avoid disputes amongst the legal heirs in future it is advisable to get the WILL attested. A bequest made by a testator to any of his legal heirs through a written WILL is valid only if other heirs agree to the bequest after the death of the testator. The validity of the legal heir is determined at the time of execution of the WILL. In contrast a bequest made by a testator to others who are not legal heirs does not require the approval of legal heirs.

The property to be bequeathed must be in existence at the time of the testators death even though it may not have been in existence at the time of execution of the WILL. The property must be capable of being transferred. The position of the legatee (beneficiary of the WILL) is akin to that of the beneficiary under WAKF in as much as the corpus may be given to someone and the benefits accrued out of the same may be given to another. However there are certain limitations to the testamentary powers of the testator. The testator cannot dispose off more than one third of his property after meeting the debts and funeral expenses and this required the consent of the legal heirs. According to the Mohammedan law in order to be the beneficiary of the bequest, the legatee must be in existence at the time of the death of the testator. A bequest made to a person who is not in existence at the time of the death of the testator is not valid. However a bequest to a child in the womb at the time of death of the testator is valid provided the child is born within 6 months of the date of the WILL. A future bequest is not valid. In case the legatee predeceases the testator the bequest will lapse and the send bequest reverts to the testators estate. If the legatee expires without having any legal heirs then his legacy would pass on to the heirs of the testator.

A WILL executed by a Mohammedan after being proved may be admissible as evidence though it does not require to be probated. The estate of the testator after his demise rests in the Executor of the well provided be agrees to be the Executor from the date of death of the testator. In case the testator dies intestate (without making a WILL) letter of Administration is not required from the Jurisdictional Court to establish right over the property of the testator. However it is required for debts due to the estate of the testator as per Section 212 (2) of the Indian Succession Act.

The WILL can be revoked by the testator under the Mohammedan law. Revocation may be expressly or by implication. Express revocation of a WILL is made by writing or orally, whereas a implied revocation of a WILL is deemed to have been made when the testers does an act from which it infers that a revocation of the Will is established. A WILL can also be revoked by a subsequent WILL where by the testator bequeaths his bequeathed property to another.