Legal Ways to Reduce Property Tax in India

The property taxes are increasing in almost all the countries of the world because of the current economy crisis. India is not an exception to this and the property taxes have increased by 35 % during last couple of years. If you own a house in India, you need to pay a substantial sum of money toward the property tax to the municipal corporation of that particular city. The total amount payable is Rs.10000 ($250) annually for a small two bedroom's apartment/house. This house tax has four components: house tax, education tax, water tax and the sanitary tax. I own a house in India, and I know how expensive it is to pay property tax. However, there are some legal ways one can minimize their property tax. I am going to cover some specific tips on how to reduce your property tax. I lived in Vadodara in the State of Gujarat in India, so my tips would be mostly applicable to this area.

First of all, try to keep the property owned by you in your possession only and not give it on rent to anybody. If your property is given on rent, the rates of such house tax go up drastically by around 200%. If the house owner himself is using the house, the rate of house tax is bare minimum. The second factor is the locality in which your property is situated in a particular city and the total built up area of your house. If the property is situated in the most prime locality of the city and have more built in area, the property tax would be quiet high. Hence, it is suggested not to buy or construct the property at such prime location/area and try to select the location of your property, slightly away from such localities. This would reduce the property tax considerably. The next aspect is the year in which you have constructed your house. The older the house, lesser would be the property tax. That is why some of the people prefer to buy the older house. The next aspect is to save on water consumption in order to save on water tax. The amount of water tax depends upon the size and the number of water connections you have in your house. You must try to minimize the number and size of the water connections in your property so as to minimize on water tax. Normally, one half inch size pipe connection may be obtained for your property, which is sufficient for a family of around four. This would result in the minimum water tax payment. However, if you take multi connections in half inch or larger size, the amount of water tax increases exponentially. The higher size connections would also result in higher water consumption and the water tax would again go up. The higher size of water connections also may increase the misuse of the water by your neighbors and the other unauthorized people.

The education tax charged by the municipal corporation remains more or less constant based upon the built up area and the locality in which your house is situated. The last item of sanitation tax depends on the size of the pipe connection for the waste disposal system of your house. The normal size allotted by the municipal corporation is half inch for waste disposal. But if you have got more than one connection or having the larger size connection of three fourth inch or one inch size, the sanitation tax amount would increase considerably. You can also save 5% of the total property tax amount by paying it in advance by one year. That means that if you pay the property tax for the year 2008 in November 2007, special discount of 5% is offered. The amount of property tax is finalized by the municipal corporation by sending their officers to inspect your property. If the amount fixed for the property tax is not acceptable to you, you can file a petition objecting to the assessment done by the officers of Municipal Corporation. The higher ranked officers would resolve such petitions at a later date. Such reassessment also may help sometimes and may tend to reduce your property tax.

If the persons follow such small tips pertaining to their property, it can surely result in to considerable saving over a long period. And the money saved is the money earned in present economic scenario.