Residential property for Commercial use

Extant of Permission to use

Professionals/ Consultants viz. Doctors, Advocates and Architects etc shall be permitted to use part of the area of their residence to the maximum extent of 50 sq.mts or 25% of the covered area, whichever is less, for offering professional consultancy only. However, the Chandigarh Advertisement Control Order, 1954 as amended from time to time, shall be strictly observed. (Order/Notification dated 14.8.1996)

Liability of Tax

All owners/occupiers of Commercial, Industrial and Institutional properties and residential properties from where commercial activities are being undertaken are liable to pay Property tax. Residential property which is used solely for residential purposes is exempted from payment of property tax.

There are two contradictory views

The built up covered area of the residential building used for commercial activity has to be taken into account for calculating the tax. And/OR

Residential buildings used for commercial purposes are liable to pay both property tax on commercial and residential building

However properties used exclusively for residential purposes are not liable to tax.

Calculation of Tax

1) A person first has to locate the group in which his building falls.

1	2	3	4	5	6
Group	Sector	Zone A	Zone B	Zone C	Zone D
I	17	20	15	13	Min.Tax at Flat rate Rs.50/-p.m.
II	22,34 & 35	16	13	12	Min.Tax at Flat rate Rs.50/-p.m.
III	7,8,9,15,19 & 26	14	12	9	Min.Tax at Flat rate Rs.50/-p.m.
IV	Other-Sectors& Industrial Area Ph-I & II	10	8	6	Min.Tax at Flat rate Rs.50/-p.m.
V	Sites earmarked for specific purpose e.g. Institutions, Clubs,Petrolpums etc.	Rs. 10 per sq.ft.

If any portion of a residential building is used for a shop or any other commercial activity, the expected let out rate, for the portion so used , shall be charged at the rate fixed for the properties in Group V.

The rates of Ground Floors only have been provided in the above table according to Zone of a Group. In respect of basement the rate given in the column No. 3,4 & 5 has to be reduced by 50% and for the upper stories rate is to be reduced by 20% of the rent of the last floor (rounded of to the nearest Rupee).

2) Thereafter he has to locate the zone in which the building is included.

Then he shall have to find out the rates applicable to the said zone.

3) He has to ascertain the floorwise built up area of the building, the built up area floorwise is to be multiplied by the rates given for various groups to arrive at monthly rateable value.

4) Thereafter he shall have to multiply the said rateable monthly value by 12 to arrive at annual rateable value.

5) Thereafter a rebate of 10% for the purpose of repair and maintenance is to be taken from the said rateable value. This is net rateable value.

6) The tax at 3% has to be calculated on this net rateable value.

Is there any minimum tax?

If for any reasons the tax calculated comes to less than Rs 50 per month, the minimum tax @ Rs 50 per month will be charged. i.e. Rs.600 per year as tax.

How to be paid?

The tax due can be paid in two instalments.

A person depositing tax in two instalments under the self assessment scheme between 1st April to 30th April and 1st October to 31^st October is entitled to rebate of 5%.

The residents are entitled to 10% rebate if they pay the entire tax for the whole year between 1st April to 30th April of the financial year in one instalment.