Saving on taxes is an important aspect of financial planning and management for commercial property owners. Commercial property owners can optimise their financial position and reduce tax liabilities by investigating various tax-saving strategies and incentives.
What are the Taxes on Commercial Property in India?
Commercial property in India is subject to various taxes and levies determined by the state and local government. The primary taxes on commercial property include property tax, service tax, and stamp duty.
• Property tax is levied on the property’s capital value and is payable annually. The amount of property tax varies from state to state and is determined by the municipal corporation or local authority.
• Service tax is levied on the services provided by the commercial property owner, such as renting out the property or providing maintenance services. The service tax rate is 18% and applies to the total value of the services provided.
• Stamp duty is a tax levied on the transfer of commercial property ownership and is payable at the time of property registration. The rate of stamp duty varies from state to state and is determined by the respective state government.
Commercial property owners must be aware of these taxes and levies to avoid legal or financial complications.
How to Save Taxes on Commercial Property in India?
Here are some of the most effective ways to save on applicable taxes on commercial properties.
• Maintainance Deductions: If you own a commercial property in India, there are several ways to save tax. One of the most effective strategies is to claim deductions on the expenses incurred while running the property. This includes maintenance and repairs, property taxes, and insurance premiums. This way, you can save up to 30% on yearly taxes.
• Standard Deduction: Rented-out commercial properties are eligible for tax deductions as they are categorised under ‘Income from house property’. You can claim a deduction of up to 30% by renting out your property.
• Income Tax Act Section 24(b): You can claim deductions on both commercial and non-commercial property under this section. If you have taken out a loan to buy, build, renovate, or repair your property, they may be able to deduct the interest paid on that loan under Section 24B of the Income Tax Act. However, there is a deduction limit of Rs. 30,000 to 2,00,000.
Conclusion
In conclusion, several methods can be employed to save tax on commercial property in India. Property owners can take advantage of various provisions under the Income Tax Act to minimise their tax liability, from claiming deductions for expenses to exploring tax exemptions and reliefs. Commercial property owners can ensure they are not paying more tax than necessary by seeking professional guidance and staying informed about the latest tax regulations.
