A government’s main income source is the levy of taxes, and as the government’s coffers fill up through earned tax revenues, the citizen’s access to resources is ascertained accordingly. Ownership of property is ownership of a taxable asset and the property tax is paid annually by the owner of a property or land to the government. Depending on government policies, this tax could be paid either to the state government or the Municipal Corporation.
The term “property” in this regard refers to real estate owned by an individual and is inclusive of houses, office buildings and premises on rent to third parties. Conceptually property tax is logical and sensible and has been globally acknowledged as is evidenced by the farmers and peasant’s records of their paying property taxes in the middle ages too.
Types of Property
There are four major categories that property in India is classified into which aids the government in estimating tax based on certain prerequisites. The categories or classifications of property in India are
· Building on land
· Personal property
· Intangible property
Present State of Property Tax
Real property inclusive of land and improvements on land is what property tax in India is paid on. The government appraises the monetary value of properties individually and tax assessment is done based on the value of each property. The municipality of a certain area is duty-bound in doing this assessment and calculating the property tax, to be paid either annually or semi-annually. This tax amount is income or revenue for the government which is used for the development of local facilities including road repairs, maintenance of parks and public schools, so on and so forth. Property tax is based on location and therefore for each city and municipality, there may be a different property tax.
Capital Gains Tax on Property
When profit from the sale of the property is taxed, it's known as Capital Gains Tax and can potentially exhaust wealth if not managed deftly. The simplest solution in tackling this issue is to buy a new home utilizing the proceeds of the sale of a property provided the property is bought in no more than two years of selling the property. Proceeds from the sale of a property can be used to build a house, as an offsetting effect that eases the capital gains tax burden on the property.
Call 7604047601 for consultation with a registered expert property lawyer on Vidhikarya.
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