Jun 10, 2023Investments

Property Tax Exemptions|Understanding Benefits and Procedure

by Godrej Properties Limited



Understanding the Benefits of Property Tax ExemptionsH

Property taxes are a significant part of homeownership, and understanding property tax exemptions can help you save money. In India, there are various property tax exemptions available to eligible individuals. This blog will guide you through the essentials of property tax exemptions, their benefits and the eligibility criteria.

Property Tax Exemptions

What is Property Tax?

Property tax is an annual levy imposed by state governments or local municipal corporations on tangible real estate assets. This tax applies to all property owners, including residential apartments and commercial premises.  

The amount of property tax is determined by various factors, such as the property's base value, built-up area, the owner's age, property type, construction type, category of use, and floor factor. 

Exemptions Under Section 24

Section 24 of the Income Tax Act offers property owners tax exemptions:

  • Full interest exemption for properties not inhabited by owners, regardless of the loan amount.
  • Up to Rs. 2 lakh interest exemption for properties not occupied due to employment or business in another city
  • There are no deductions for brokerage or commission on loans or tenants
  • A maximum exemption of Rs. 2 lakhs if property construction is completed within three years; otherwise, a Rs. 30,000 exemption

Tax Deductions Under Section 80C

Section 80C provides deductions on expenses like stamp duty, registration charges, and life insurance premiums up to Rs. 1.5 lakhs. It also allows deductions on premiums for policies covering individuals, spouses, and children. Premiums should not exceed 10% (post-April 1, 2012) or 20% (pre-April 1, 2012) of the sum assured. Section 80D offers deductions for life insurance health riders, reducing taxable income for policyholders.

Exemption Criteria and Eligibility2

To qualify for property tax exemptions, you must meet specific criteria. These exemptions are designed to provide relief to particular individuals or properties. Let's explore some common property tax exemptions and their associated eligibility requirements. 

Senior Citizen Exemption

Senior citizens, usually 60 years or above, can avail themselves of property tax exemption for senior citizens. This property tax benefit for senior citizens aims to ease the financial burden on elderly individuals who own property. However, the age requirement may vary slightly based on the local government's regulations. It is best to consult a financial advisor to understand more about property tax for senior citizens in India.

Disability Exemption

People with disabilities are also eligible for property tax exemptions. The disability can be physical, mental, or both. The nature and extent of disability may affect the amount of exemption provided. Necessary documentation is usually required to avail of this exemption. 

Agricultural Land Exemption

Besides house loan tax exemptions, agricultural land is often eligible for property tax exemptions. However, the rules and regulations surrounding agricultural land exemptions vary across states. The land must be actively used for agricultural purposes to qualify for this exemption.

The Process of Availing Property Tax Exemptions

To avail of property tax exemptions, follow these general steps: 

Check Eligibility

Review the specific criteria for the desired exemption. Then, visit the local government's website or consult a tax professional to ensure you meet the requirements and are eligible to be exempt from taxes.

Gather Documents

Collect necessary paperwork like age proof, disability certificates, or land ownership documents. Prepare all the required documents.

Submit Application

Formally apply for the property tax exemption with the relevant local government authority. Include all the specified documents and information.

Verification and Approval

The local government will assess your application and supporting documents. They may conduct verification to ensure accuracy and eligibility. Once approved, you will be notified of your exemption status. 

The final word: Maximising Savings through Property Tax Exemptions

The availability of property tax exemptions allows homeowners to reduce their financial obligations. Individuals can effectively lower their property tax burdens by understanding the different types of exemptions available and meeting the eligibility criteria. It is essential to stay updated with local regulations and consult with professionals to ensure you make the most of the exemptions you qualify for.


Frequently Asked Questions

1. Do property tax exemptions apply uniformly across all Indian states?

Ans: No, property tax exemptions can differ from state to state. Therefore, understanding the regulations and requirements specific to your state or local government is essential.

2. Can I apply for multiple property tax exemptions simultaneously?

Ans: Yes, you can apply for multiple property tax exemptions if you meet the eligibility criteria for each exemption. However, consulting tax professionals or local government authorities is recommended to understand the application guidelines and procedures for multiple exemptions.

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