Land tax is one of the costs a buyer incurs when he owns land, plots or even a built property. It is also called Property Tax. Stamp duty and registration charges are paid as a single-time cost whereas payment of Land tax is done annually or semi-annually. Hence it needs to be understood before investing in real estate. Also note, the computation for land tax may differ from state to state.
Significance of Land Tax
Local governments in India rely fully on land tax as a principal source of income. This means they use this money to provide important public services. These services include road maintenance, sanitation, water supply and waste management for residents. Land Tax also aids in the development of infrastructure, and thus it becomes a necessity for better facilities for the residents. It is collected annually or semi-annually. It allows the government to collect a fixed amount for the development of cities and villages. The timely payment of land tax allows the economy to grow along with the smooth functioning of municipal bodies.
Land tax is useful in regulating ownership of land and prevents illegal holding of the land. It also encourages transparency in real estate transactions, ensuring better governance and compliance with property laws.
Who Pays Land Tax?
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Land tax is payable by the legal owner/ co-owner of the land.
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It is levied on individuals, businesses and institutions that possess lands.
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Even though the property may be rented out, the tax must be paid by the owner.
Conditions that Dictate Land Tax
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Location of the land
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Area/size of the land
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Gender: Female proprietors receive certain rebates
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Facilities by the local authority
Land Tax Exemptions
Land tax exemptions by the Municipality:
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Any land, building or part of a building used solely for public worship is exempted from land tax.
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Any land or building used solely as a public burial place or cremation grounds is exempted from land tax.
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Any open space, such as a parade ground, owned by the Central or State Government is exempted from land tax.
Reduced Land Tax Rates
Certain owners may enjoy partial exemptions from land tax. So they would have to pay less land tax. These are the people who come in this category:
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Agricultural land that is solely used for farming can enjoy Land tax exemptions.
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Age of the owner – Seniors would normally pay less Land tax.
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Owners of old properties have to pay less tax.
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Properties sitting in flood-prone areas mostly have low property taxes.
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Income of the Owner- Those in the Economically Weaker Section (EWS) or Lower Income Group (LIG) pay lesser property tax.
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The property used for public purposes or owned by a charitable trust enjoy lesser tax rates.
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In some municipalities, the longer one occupies a given property, the lesser the tax one needs to pay on that property.
Land Tax vs Property Tax
Although land tax and property tax are often used interchangeably in India, they have different meanings. Here is a look at the technical difference between land tax and property tax.
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Land Tax applies to the ownership of land, usually on plots and agricultural lands. It is calculated based on the land’s size, location and usage.
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Property Tax is charged on built properties, such as houses, apartments, offices and commercial buildings. It includes both the land and the structure on it. It is collected by the local government or municipality.
In short, land tax is paid for land, plots and agricultural lands, while property tax is paid for developed land with buildings. The tax rates and rules may vary depending on the state and local authorities.
How to Pay Land Tax Online
With digital services, you can now pay municipal taxes online through your State government or local authority’s website. This makes the process faster and hassle-free. To pay land tax online, you will need the khata number or revenue survey number of your property.
Follow these steps to make the payment:
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Visit the Official Website – Go to the municipal corporation website of your city.
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Find the Property Tax Section – Click on the tab for property tax and navigate through the options.
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Select the Correct Form – Choose the form based on your category as a property owner.
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Choose the Assessment Year – Select the year for which you are paying the tax.
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Enter Property Details – Fill in the property identification number, address proof, year of purchase, clearance certificate from the society, and other required details.
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Select Payment Method – Choose your preferred payment mode, such as debit card, credit card, or Internet banking.
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Complete the Payment – After successful payment, download or print the receipt/challan for future reference.
Conclusion to Land Tax
Land tax is very crucial in the revenue collection of the local government, as it is used in developing infrastructure and basic public services. It can be paid online on the government website of your city or state. When land taxes are paid on time, landowners become contributors to the city or village development. They also ensure legal rights over their properties. Land tax and property tax are often referred to as tax on any property, and are used interchangeably in India.
External references:
Mohua- mohua.gov.in/upload/uploadfiles/files/chap38.pdf
Bajaj Finserv- www.bajajfinserv.in/property-tax
