Local Tax in India

Details of property taxes in India, which are determined at local/municipal authority level…

Property Tax

This is levied annually by the local/municipal authorities on property for the maintenance of basic civic services in a city, town, village or other municipality.

In India, property tax is paid by the property owner, and it is set at a specific rate by the local/municipal authority, according to the property’s value.

The annual value is determined by the following:

  • Municipal valuation – market value of the property set by the municipal/local authority
  • Fair rent – rental value of let properties, according to the guidelines set by central government
  • Rent received (for let properties)

The annual value is zero for properties in which the owner resides continuously and is not let out.

Property tax is levied on:

  • Apartments/flats
  • Residential houses
  • Shops
  • Factories
  • Office buildings
  • Warehouses

Immovable property is also considered as a source of income, and any revenue generated from it is subject to income tax. Therefore, vacant plots of land without any buildings are taxed as an alternative income source, and are not subject to property tax.

Additionally, owners are entitled to deductions of up to 30 percent of the net value of a property for repairs, building and maintenance.

Further information about local property tax regulations and required forms can be found on the official website of the relevant local municipality.

Non-residents and overseas citizens

A non-resident Indian or a person of Indian origin/overseas citizen of India can purchase and/or transfer immovable property in India. However, they cannot purchase and/or transfer agricultural land and buildings.

Non-Indian foreign nationals who live abroad cannot purchase and/or transfer agricultural land and buildings, nor purchase immovable property in India. Instead, they can acquire and/or transfer immovable property on a lease for up to five years. They can also inherit immovable property from an Indian citizen or resident.

Non-Indian foreign nationals can purchase and sell immovable property in India if they are full-time residents and are granted formal permission.