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The Government of India imposes land tax as a means of generating revenue for local government bodies and supporting essential public services. This tax applies to vacant lands and must be paid either annually or bi-annually, depending on local regulations.
As land ownership comes with a tax obligation, you are required to pay the land tax to the local municipal body where the property is located. With India's technological advancements, many areas now offer the convenience of online land tax payments. Whether your land is in a rural or urban area, you can make payments easily without having to visit the local office, saving both time and effort.
To possess a land title in your name, you are liable for land tax payment to a local body of the region. You can choose to pay this tax annually or bi-annually offline or online, depending upon the services available. Based on different parameters, the land tax differs based on a location in different states.
The local body uses this revenue from land tax to fund community development, public services, and maintain infrastructure. To comply with local taxation regulations and payment options, you can contribute to local development.
A land tax is a significant income source for local bodies such as municipal corporations. The revenue generated through this taxation is used to maintain street lights, electricity, sewage, water supply, and cleanliness. For maintenance and possession of civic amenities in your areas, land tax payment is necessary.
The land tax depends on factors like civic amenities, location, size, and the annual value as per the market in the area. In India, primarily three methods are used to calculate the final value of a land tax.
Annual Rental Value System
This tax calculation accounts for the potential of every land to generate monthly rentals, irrespective of whether it is constructed for rent. Depending on this potential earning, you will have to pay some percentage of your rental earnings as tax. This system is more common in cities like Chennai and Hyderabad.
Unit Area Value System
This calculation uses per-unit price to determine the land tax, based on the carpet or build-up area. The location and land uses are prime factors, based on the potential returns. This taxation calculation is more common in cities like Delhi, Ahmedabad, Bengaluru and Patna.
Capital Value-Based System
As the market land rates are revised annually by the civic body, this system imposes calculated tax based on the current value. This system is enforced by the Brihanmumbai Municipal Corporation (BMC).
Municipalities or municipal corporations collect this land tax. Municipal corporations use a variety of methods to implement this tax in the region. Depending on the value of the land and other associated factors, you must pay this tax once or twice a year. As the civic amenities available vary in every region, the land taxes in various cities and states are different.
Irrespective of the fact whether the land is vacant or not, the person owning the land has to pay the tax. It is also known as Vacant Land Tax in some states. Many local bodies in some specific Indian states have imposed vacant land taxes on plots and land parcels, which are located in a premium location as unused land. Since limited and premium land is an expensive asset, taxation helps in public benefit and potential development.
You must note that land tax is different from the annual tax levied under the income tax laws for real estate.
Depending on the services available in your area, you can choose to pay the land tax online or offline. You can either visit the official website of the municipal body for quick payment of land tax. Or, you can physically visit the tax office to make payment through cash or cheque.
Online Mode
Visit the official municipality website or the land tax portal of your state
Register or log in using your credentials
Enter the land details such as survey number and ID
Check the payable amount
Select a payment option from debit/credit cards, UPI or net banking
Confirm payment and download the receipt for future reference
Offline Mode
Visit your nearby municipal office in the area
Get the form to pay land tax and fill it
Submit the duly filled form along with the payment in cash or cheque
Confirm the payment and get a receipt for future reference
Municipal bodies across India offer rebates on land tax based on various factors. Some of these factors include:
Senior Citizens: Land tax is reduced for senior citizens, depending on their age.
Flood-Prone Areas: Areas prone to flooding generally have lower land tax rates.
Economically Weaker Sections (EWS): Individuals with low income or those belonging to economically weaker sections benefit from reduced land tax.
Following documents will be required when paying land tax including land revenue receipt, Property Identification Number (PID), and Identity proof.
Proof of Ownership: Any legal document proving ownership such as a title deed or sale deed
Property Identification Number (PID): A unique number assigned by the local authority for land
Land Revenue Receipt: Previous year’s tax proof or any earlier proofs
Encumbrance Certificate: To prove there are no legal claims on the piece of land
Mutation Certificate: Needed in case the ownership has changed in recent time
In India, there are various types of land, each with distinct characteristics and specific uses. Some of these include:
Agricultural Land: As farming is a key sector in India's economy, agricultural land is predominantly used for farming, especially in rural areas. It supports the cultivation of crops such as grains, fruits, pulses, and vegetables.
Commercial Land: This type of land is designated for the development of commercial properties, including offices, showrooms, shopping malls, and other business-related facilities.
Industrial Land: Industrial land is primarily used for manufacturing activities. It is characterised by features such as easy access to transportation, power and water supply, and large plots of land, often measured in hectares.
Forest Land: Forest land is typically covered with dense vegetation and plays a crucial role in regulating the local climate. It contributes to sustainable development, and the government takes proactive measures to preserve and protect it.
Residential Land: This type of land is used for building residential properties such as houses, apartments, and other dwellings.
Wetlands: Wetlands are areas with abundant swamps and marshes, often covered by water. They provide important ecological functions, including supporting wildlife habitats, controlling floods, and purifying water.
Barren Land: Barren land refers to regions with low fertility, typically devoid of vegetation, due to insufficient rainfall. It is often repurposed for non-agricultural uses such as setting up solar and wind power plants.
A land tax is different from a property tax as it is only applicable on the sole land to promote land usage. This tax works on vacant land.
You can register for a land tax online by visiting the official state land tax portal or local body website. You can use your information and enter credentials to make land tax payments online.
You can pay your land tax either online or offline, depending on your preference. However, there are no general exemptions for land tax.
Your tax liability may be reduced in the following cases:
If you are a senior citizen
If your land is located in a flood-prone area
If it belongs to a charitable organisation and is designated for public use
If you belong to an economically weaker section
Yes. Depending on the rules provided by the local municipality of the location, you can choose to pay land tax for multiple years online.
If you do not pay land tax, you might face legal consequences, penalties, and court proceedings.
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