Do you have to pay tax on vacant land in India?

[ecis2016.org] Even though owners do not have to pay any property tax on vacant land in most parts of India, some states have introduced systems to levy taxes on vacant land lying unused in city limits

All property owners have to pay an annual tax, known as property tax, for the buildings they own. The same rule applies in case of land attached to buildings. However, in a farm-based economy like India, owners of vacant plots or vacant land, are typically not liable to pay any taxes, especially in rural areas.

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However, several municipal corporations in big cities have already started to levy taxes on vacant land and vacant plots lying unused in the prime areas of cities, since such treatment of the land amounts to wasteful use of highly expensive resources. This change in approach has become more prominent over the past two decades.

Note that for the purpose of taxation, vacant land cannot be treated as a residential house, in spite of the fact that some states levy taxes on the same.

Vacant land tax in Tamil Nadu

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The Greater Chennai Municipal Corporation (GCMC), for example, started to levy vacant land tax in 2009, with an aim to enrich its coffers. After passing a resolution in this regard that year, the GCMC has been charging 50 paise per sq ft from owners, whose vacant land lies close to the interior roads. Owners whose vacant land is in proximity to bus route tracks, on the other hand, have to pay Rs 1.5 per sq ft as vacant land tax.

[ecis2016.org] All about property tax in Chennai

In a survey done in 2019, the municipal body also identified nearly 30,000 vacant plots in the area under its ambit and estimated that it could earn an additional revenue of Rs 25 crores, if the unregistered vacant plots were formally registered by the 5,000 unregistered owners. In Coimbatore also, the authorities charge vacant land assessment tax, from 40 paise per sq ft onwards.

Vacant land tax in Andhra Pradesh

In Hyderabad, too, owners of vacant lands are made liable to pay taxes. Under Section 199 of the Greater Hyderabad Municipal Corporation Act, the civic body can charge 0.05% of the capital value of the land as tax, for a land which is not exclusively used for agricultural purposes or is not occupied or adjacent to a building.

[ecis2016.org] A guide to calculating and paying GHMC property tax online in Hyderabad

Vacant land tax in Punjab

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After amendments were made in the Punjab Municipal Act, 1911 and the Punjab Municipal Corporation Act, 1976, for the purposes of levying the tax, people in Punjab also have to pay property tax on vacant land in the state. For vacant plots and unutilised buildings and plots, the tax will be 0.2% of the annual value of such properties.

Vacant land tax in Delhi

The New Delhi Municipal Council (Determination of Annual Rent) Bye-laws, 2009, has empowered the authorities in the national capital, to levy tax on vacant land and plots. However, the Supreme Court of India later struck down that power.

[ecis2016.org] How to pay property tax in Delhi

Vacant land tax in Jammu & Kashmir

The union Home Affairs Ministry has enabled the government of the union territory of Jammu and Kashmir to impose property tax through municipal corporations.

By making amendments in the Jammu and Kashmir Municipal Act, 2000, and the Jammu and Kashmir Municipal Corporation Act, 2000, carried through the Jammu and Kashmir Reorganisation (Adaptation of State Laws) Order, 2020, the UTs have been given the right to levy property tax on all lands and buildings, or vacant lands, or both, situated within the municipal area. The tax amount will be kept at up to 15% of the taxable annual value of land and building or vacant land.

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