This article explores one of the important legal doubt among the people to differentiate between Power of Attorney (PoA) and Letter of Authority (LoA). These two papers has the different purpose and it is important to understand the meaning of the each term. In my previous article I have explained about how an nri can give PoA to another person which would have clearly explained the nature of PoA. But, this article intends to give exact meaning of the terms and when it can be used. If you have any doubts, please post it in the comments section. Subscribe to our future articles here.
What is Letter of Authority (LoA)?
When Karthick leaving India, he has given Letter of Authority (LoA) to his wife for carrying out his work on behalf of him. But, he is not aware of the limitation and scope of the LoA. When his wife could carry out the normal transactions in the bank there is no issues. But, when it comes to dealing with the original documents of Kartick’s house, banker’s refused to hand over to his wife and they said LoA is not sufficient and she must produce the Power of Attorney (PoA) for such operations.
From the above example, it is clear that Letter of Authority (LoA) has to be used for any specific work like doing the bank transactions, etc. But, it has the less authority to carry out any transactions on behalf of the original person. Normally LoA is given for doing the small tasks.
What is Power of Attorney (PoA)?
When you want to give a person to complete the bigger transactions like selling your property or any major legal work on behalf of you, you must give him the Power of Attorney (PoA). This letter give him the complete power to carry out any transactions for you. There are two types of PoA. One id general and another one is special. if one is giving the special, that person can carry out only the specific operations. If he wants to do the transaction in the bank, there is no need to register the PoA. But, if he want to deal with the immovable property, he must have registered the PoA. But, in the recent judgement from the supreme court, general PoA can not deal with the immovable properties.
Both, PoA and LoA can be revocable and irrevocable. In the case of LoA the process is easy and you have the options to set the expiry date for the papers. But, the process is not easy for the PoA. Also, note that owner is the responsible for the doing of the holder of the papers. It is important for you to know what power you are giving to another person and he must aware of the limitation of his power.
Summary
I hope this article would have given basic idea on the Power of Attorney (PoA) and Letter of Authority (LoA). It is important to know the difference between these two terms. If you have any doubts, please post it in the comments section.
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December 19, 2011 at 11:24 pm
salil:can a power of attorney which is registered used even if the person who has given (poa) dies
December 2, 2012 at 11:41 am
Hi,
I find your blog very informative.
I would like to ask if power of attorney allows the holder to gift an immovable property to his relatives and will it be exempted under income tax rules for gift.
thank you