Guide to Property Taxes in India
Tax Rate on Rental Income |
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| Monthly Income | US$1,500 | US$6,000 | US$12,000 |
| Tax Rate | 18.50% | 30.70% | 34.00% |
Nonresidents are taxed only on their Indian-sourced income. Married couples are assessed and taxed separately.
The tax year in India is from 01 April of the current year until 31 March of the succeeding year.
Income Tax
Income is taxed at progressive rates as follows:
| Taxable Income (INR) | Tax Rate |
| Up to 400,000 | 0% |
| 400,000 - 800,000 | 5% |
| 800,000 - 1,200,000 | 10% |
| 1,200,000 - 1,600,000 | 15% |
| 1,600,000 - 2,000,000 | 20% |
| 2,000,000 - 2,400,000 | 25% |
| Over 2,400,000 | 30% |
The highest possible surcharge is 25% for people earning more than Rs 5 crore (1 crore = 10,000,000).
Education Cess
An education cess of 4% is levied on the total income tax liability.
Rental Income Tax
Nonresidents earning rental income are taxed at progressive rates. In case of co-ownership, both parties are taxable separately.
Income earned from leasing land, buildings, and furniture is subject to a non-final 15% withholding tax, levied on the gross rent. This tax is credited against the taxpayer’s total income tax liability.
Taxable income is computed based on the actual rental value of the property, or the government-determined rental value, whichever is higher. A standard deduction of 30% is granted for repairs and collection charges. Interest payments relating to loans used for the construction, acquisition, and repairs of the property are also entirely deductible.
Capital Gains Tax
Capital gains realized from selling real property are taxed at the standard income tax rates. Taxable capital gains are computed by deducting acquisition costs and incidental expenses from the gross sales proceeds.
Capital gains realized from real property are subject to non-final withholding taxes, levied on the gross sales proceeds. Short-term capital gains are subject to a 10% withholding tax, while long-term capital gains (holding period exceeds three years) are subject to a 20% withholding tax. This tax is credited against the taxpayer’s total income tax liability.
Corporate Taxation in India
Income Tax
Income and capital gains earned by companies are subject to corporate income tax at the following rates:
| Tax Type | Rate |
| Domestic Companies | 26.00% - 38.00% |
| Foreign Companies | 38.00% |
Buying and Selling Taxes and Costs
| Tax Type | Rate |
| Property Transfer Tax | 4.00% - 7.00% |
| Agent Fee (Buyer) | - |
| Agent Fee (Seller) | 1.00% - 2.00% |
| Legal Fees | 1.50% |
| Notary Fee | 0.10% |
| Costs Paid By Buyer | 5.60% - 8.60% |
| Costs Paid By Seller | 1.00% - 2.00% |
| Roundtrip Cost | 6.60% - 10.60% |
| Source: Global Property Guide, Deloitte | |
Property Holding Tax
Property taxes in India can differ significantly depending on the state and municipality. Here is a detailed breakdown:
| Property Type | Tax Rate |
| Residential Property | 0.10% - 1.00% |
Property taxes are generally based on the annual rental value of the property. For leased properties, property tax is levied on the annual rental value of the property.
Municipal Duties
Property owners are responsible for municipal duties, which include waste collection, street cleaning, and infrastructure maintenance.
