Rented property attracts higher property tax than self occupied in most cities.
Who Pays – Owner or Tenant?
Legally owner pays property tax always, not tenant. Rent agreement may say tenant reimburses, but municipal corporation will recover from owner only.
Higher Tax for Rented
- Delhi MCD: 2x if rented (occupancy factor 2)
- Pune PMC: Use factor 1.5x commercial if rented for business, residential rented same as self but ARV higher
- Bengaluru BBMP: 2x for non-residential, rented residential 25% higher
- Mumbai BMC: No extra for rented residential, but 2x if commercial
Example – Delhi 100 sqm Flat
Self occupied: Rs 2430 tax. Same flat rented: 2430 x 2 = Rs 4860. Because occupancy factor 2.
Vacancy Remission – Save Tax
If property vacant for >60 days, you can claim remission: Delhi 50% vacancy relief if intimation given within 15 days of vacancy. Pune: No remission. Bengaluru: 50% if vacant full half year.
Income Tax Benefit
Property tax paid is deductible from rental income under Section 23. So if you pay Rs 10000 tax, and rent Rs 200000/year, taxable income = 200000-10000 =190000. Plus 30% standard deduction.
FAQs
Q: Can tenant pay directly? Yes via owner PID, but receipt in owner name.
Q: Do I need rent agreement for tax? No, but needed for income tax.
Q: PG / Hostel tax? Considered commercial, 2-3x residential.