Property Tax

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

12 February 2011 Whether property tax is added in the cost of aquisition at the time of purchase of self occupied property or is shown as withdrawal from the capital account in case of individuals?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

12 February 2011 Property Tax means taxes payable to local authorities. It is generally shown as
withdrawal from the Capital Account.
It is not to be added in the cost.

Querist : Anonymous

Querist : Anonymous (Querist)

12 February 2011 Thanks a lot sir,
But can u tell me that whether property tax can be treated as part of improvement cost for the purpose of capital gain?

What happens in case of salaried person who does not have any income other than salary and he pays property tax.In that case whether his capital account will be negative?

Waiting for ur reply.....

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

13 February 2011 Property tax is not a capital expenditure and does not make any improvement in the nature of asset.
In case of self occupied properties even non salaried persons have to pay the property tax and they have to show it as "Drawings".

Capital account will be reduced by the amount of property tax, which is very small amount in comparison to Salary Income, but practically it can't be negative unless a huge amount of property tax has not been paid earlier by him.

By Property Tax, we mean tax annually charged by municipal corporation or local authorities.

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