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BCD urges NCT’s to consider Law Offices under “residential and public purpose” for Property Tax and requests to remove Professional Tax on Lawyers

Professional Tax - lawyers,property tax - NCT - Taxscan

The Bar Council of Delhi wrote a letter to the NCT’s Lieutenant Governor raising concern against Professional Tax on lawyers, a charge of property tax on offices at a higher rate as ‘Business Buildings’ and expressed dissent against the levy of professional tax on lawyers.

The South Delhi Municipal Corporation (SDMC) on July 28, 2020, passed the proposal to levy a professional tax on self-employed persons, a first for Delhi, and doubled the tax on rented commercial property. The municipal body also announced a hike in tax on the transfer of property in new tax proposals aimed at ramping up revenue collection hit by the national lockdown to contain the spread of COVID-19.

The professional tax would be levied on self-employed professionals such as doctors, lawyers, chartered accountants, and architects, etc, and those working in private firms for using civic amenities. As per the proposed tax slabs, those earning less than Rs 50,000 per month would not be taxed.

Consequently, The Bar Council of Delhi has written to the Delhi Municipal authorities urging them to consider law offices in the category of ‘residential and public purpose’ instead of ‘business’ for the purpose of assessment of property tax.

“There appears to be some bias and malice against the lawyers since even in the past, the municipal corporations in Delhi have made feeble attempts to impose a professional tax on the lawyers and other professionals,” reads the communication.

The BCD has been highly concerned and conveyed its acceptability to such a repeated attempt over and over again despite having been proposed and dropped in the past.

The Chairman of the Bar Council of Delhi, KC Mittal in the other letter has made the representation to the authorities under the Delhi Municipal Corporation Act, 1957 to assert that law offices cannot be termed as commercial in nature.

“This is ultra vires the constitution in as much as both are discharging their professional duties and therefore the Use Factor should be 1. You are aware that all professionals form one class but the legal profession has been treated as part of commercial activity, which is illegal, arbitrary, and contrary to the law laid down by the Hon’ble Courts,” the letter said.

The Bar Council of Delhi has stated that entities discharging statutory functions and performing necessary social functions cannot be treated as a commercial and should be subjected to the Use Factor 1, which attracts the lowest tax rate. Use Factor 1 category properties include residential property and properties for non-residential public purposes.

The Bar Council of Delhi has thus requested the authorities to consider the law office/the legal profession under Use Factor 1 for the purpose of property tax assessment.

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