Friday, March 15, 2013

Introduction to Property Tax in India

Property tax in India is not as easy to understand as someone might think. However, if we dissect it into smaller and simpler to understand parts, it will definitely make things a lot easier.

The property tax rates in India have been rationalized to make them easier for public to understand. The changes have been made to make the tax system comply with the international property tax standards. Capital Value System (CVS) has been introduced in Bangalore. Similarly Delhi has set up a website making tax payments a lot easier. However, there are still a lot of misconceptions about property tax in India that need to be cleared. The most important question that often goes unanswered is
which property can be taxed. Let us discuss in detail the different scenarios of property taxation in India.

Self Occupied Property
If you own a property that is only occupied by you and it is fully utilized as per your requirements throughout the year, it is not taxable.

Owning More Than One Property
However, if you own more than one property in India, some of which have been given on rent and some are still vacant. You need to have a property that is not rented out and has been fully self-occupied. This extra residential property which is self occupied but does not generate any income will not be taxable. However, you must keep in mind it is that property which has been fully self-occupied and not generating any income. But, all other extra properties that have been rented out and are generating income, will be taxable according to your tax bracket.

Gifted Property to Your Spouse
In this case when you have gifted a property to your spouse, it will be tax exempted under the income tax Act 1962 section 56 (2). But, before we jump onto any conclusion about tax on this property, this property is only tax exempted when it is not generating any income. If this property is used to generate income, it will be taxed to the person who has gifted the property.

Leased Property
A long term leased property’s income may or may not be subject to tax, depending on the length of lease. Any property generating income with a lease less than 12 years will not be subject to tax. However, a property that has been leased for more than 12 years will have all its income taxed.

How to find help?
Taxable property income is all about understanding the relevant laws and acting within the legal framework to ensure that you have not blown your income on income taxes every year. Unfortunately tax lawyers cost a lot of money. They are in continuous search of people vulnerable for their weaknesses of saving property tax. However, not all hope is lost as there are many legal products now available in the market that can easily help you understand all property tax law provisions at the cost of a dime. Net Lawman offers comprehensive property sale agreement that makes life of ordinary people a lot easier. People not familiar with any tax terms can find all information in plain and easy to understand language. This will not only help you save botheration but also get you the right advice that can save you a lot of money. 

"This is a Guest Post by Mr. Fahad Zahid from Net Lawman Ltd., UK."

Labels: Transfer of Property Act, Real Estate, Taxation, Property tax, India, lawyers, income tax act, lease


  1. Nice information about property tax in
    India . Helpful to readers..

    Real Estate Developers

  2. Hi,

    Thanks for the this info. I have some questions for you. Could you please help me on the same. I have bought an appartment in July and expecting to take the possession by end of Nov 2013. I do not have any other property in my name. Should I be paying any property tax for this year? Is the calendar year Apr 1 to Mar 30? Should I also be paying property tax for the undivided share (UDS) land i got while puchasing the appartment?


  3. Thanks..Loved this post and shared it with all my colleagues. Thank you so much!

    Legal Advice India