• Residential or commercial tax

Hi,

Need your advice. We are staying in HSR bangalore in a rented house ground floor and it is considered as residential property. The house is of total GF+FF+Terrace +GF Car Garage. We are staying in GF-Ground Floor and using the Car Garage. My wife would like to run a Dental Cliniq as she is a BDS holder and the owner don't have issues but he said if the cliniq registered and i put a board out side the property will become Commercial and they have to pay the house tax under commercial usage to BBMP or concern body. Please advice what to be done here and what are the charges/taxes applicable. We will use only car garage as a cliniq not the completely house.
Asked 1 year ago in Property Law from Bangalore, Karnataka
Religion: Hindu
The property which is residential can be used for commercial purposes wherein only certain amount of space could be used eg. In Mumbai 20pc of the same can be used for commercial purposes. It varies from state to state so you would have to check the municipal laws for your area to check if that is permitted.
Shaveta Chaudhary (Sanghi)
Advocate, Chandigarh
821 Answers
60 Consultations
5.0 on 5.0
Since the landlord would be saddled with the tax to be imposed by Municipal Authority he has got every right put such opposition. It is true that even a portion of a house is used commercially then the Municipality may choose to impose commercial tax. In this you have to agree to increase the rent to meet such extra tax in the event the Municipality increases such tax. The quantum of tax differs from state to state and city to city and hence I am not in a  position to make comment on it.
Devajyoti Barman
Advocate, Kolkata
5161 Answers
54 Consultations
4.9 on 5.0
1) doctors , lawyers , CA can use 30%of residential premises for consultations . that would not be regarded as using property for commercial purposes . 

2) if more than 30%of flat is used for commercial purposes then they would have to pay commercial water charges , property tax for commercial purposes

3) in your case you are not using the entire house but only portion of the house for dental clinic , that is permissible .

4) allahabad HC has held All the petitioners are qualified and registered medical practitioners. They have a right to run their private medical clinics for giving professional advice to the patients. A doctor's clinic run in a portion of the residential house, which may either be small and sufficiently big but which may not occupy the entire area with a waiting hall, a dispensary or even a small diagnostic facility may not convert the user of a premise from a residential user to commercial user. A non-nuisance professional activity running by doctors, lawyers, consultant, architect, chartered accountant, property consultants, government guides may also fall in the same category. The trouble starts when the doctor or any other consultants uses a substantial part of the building, for the activity including the incidental activities such as x-ray, ultrasonography, pathology, operation theatre and wards in which patients are admitted. These activities together with the consultancy, overreaches the limit of the user for professional use.

5) In the present case, we find that all the petitioners are using the residential houses for the purposes of running their clinics and have also converted the use of the dominant portion of the building for providing activities such as x-ray, ultrasonography, pathology, operation theatre, private wards and general wards. Some of these wards are so small, that they may hardly accommodate one bed in the room. The argument advanced by Shri Arvind Srivastava, that such user is incidental to medical practice, cannot be accepted. No reasonable person in such case can say that the user of the building has not been changed from residential to commercial.
14. In these writ petitions all the doctors have extended their consultancy to include the diagnostic techniques as well as admitting patients in the rooms and halls converted as wards. The professional activity in also these cases has converted the user of the house from residential to commercial for which all the doctors have therefor applied for and have electric connections for commercial purposes.
15. The rights given to carry on profession, including medical profession under Article 19 (1) (g) of the Constitution of India, are subject to reasonable restrictions in public interest. Such restrictions can be placed by the law made by the State under Article 19 (6) or may be imposed under an agreement to which the person may subscribe, in the interest of other residents. We do not find that a notice for cancellation of registration is a restriction on the right of a person to practice profession. The UP Awas Evam Vikas Parishad and Chief Medical Officer have not passed any such orders directing the petitioners to stop medical practice. They have only cautioned them to stop using the premises for commercial purposes. If they want to continue to use the diagnostic techniques and surgeries and admit patients, they should shift the place of their business to some other place, where such activity is permitted. The user of the premises by the professionals for a purpose other than the purpose for which it was allotted or purchased by him is not a restriction on the right to carry on the profession.
16. The medical professionals running nursing homes are also required to obtain registration for running ultrasound machines, permission from the Atomic Energy Commission for the use of x-ray plant and to dispose of the medical waste after obtaining registration and the facilities provided under the Bio Medical Waste Management Rules. There is nothing on record to show that the petitioners have obtained these permissions and licenses. 
17. The restrictions placed by the UP Awas Evam Vikas Parishad for using a residential accommodation allotted/purchased for any purpose other than residential purposes is also for maintaining a peaceful environment for other residents in the residential colonies. Any business or commercial activity involves these houses to be visited by patients and their relatives, use of motor vehicles, parking, and putting pressure of the civic amenities such as electricity, water, sewer and roads. It also affects the tranquility of the residential area used by the senior citizen and the children. The change of the dominant user of the building in a residential colony not only affects the immediate neighbors but all the residents of the colony and thus it is essential that in the residential colonies, the constructions should be used dominantly for residential purposes.
18. We do not find that the petitioners have been asked to stop their medical practice or to stop the patients visiting in their clinics. They have been simply asked to stop the use of diagnostic techniques including x-ray, ultrasonography, pathology, running of operation theatre, maternity centres and for using their houses for admitting patients. Such an activity is violative of the terms and conditions of purchase and constructions of the houses and the land use, and can be regulated by the UP Awas Evam Vikas Parishad both by giving notice of cancellation of the allotment or by taking steps to cancel the registration under which such activity is being carried out. The Chief Medical Officer, Etawah has registered the petitioners as medical practitioners, under a declaration given by them to run the consultancy clinics the petitioners. The petitioners are obliged to abide by their declarations.
19. Inspite of the repeated reminders given by the Court, the State Government has not made any law regulating the medical practice including the running of private nursing homes/diagnostic clinics and hospital. In the absence of any law covering the field the Court has to apply the test of reasonableness which may protect both the residents of the colony as well as patients visiting the doctors. It is inhuman for the patients to be given professional service in such small residential buildings. The size of the rooms of operation theatre, private wards and general wards would show that the doctors in order to earn money have converted small houses into nursing homes packing up the patients in unhygienic cubicles. A room measuring 9.5x9.5' can hardly be used as a hygienic private ward, and in any case a room measuring 15.1'x19' cannot be used as a general ward. The petitioners are apparently using the residential accommodation for running nursing homes putting their patients to serious inconvenience.
20. We do not find any good ground to interfere with the notices and the directions given by the Chief Medical Officer to the petitioners to shift their activities other than consultancy including diagnostic, surgical, and admitting the patients to a place other than the residential houses in the Awas Evam Vikas Colony. It will, however, be open to the petitioners to either shift the medical services, except the consultancy from their residential houses in the Awas Evam Vikas Colony to any other place, or to confine their activities in the colony only for consultancy. 
Ajay Sethi
Advocate, Mumbai
23123 Answers
1214 Consultations
5.0 on 5.0
1. The land lord is right in stating that in case of your opening a dental clinic in his rented premise, his said premise will  betreated as commercial property by the local Municipal Authority/Corporation and the property tax will be charged at higher rate,

2. The amount of tax will be as per the rule framed by the local Corporation,

3. Once the property is maeked as commercial property, it will be continued to be treated as commercial property for the purpose of collecting tax,

4. Since, tax is not charged seperately on garage which is considered as part of the dwelling house, your running a commercial clinic at the garage of the house will render the house as commercial property. 
Krishna Kishore Ganguly
Advocate, Kolkata
12043 Answers
228 Consultations
5.0 on 5.0
A. Generally, Doctor, Lawyer and Yoga purpose the 20% residential property can be used for commercial activities.

B. In your case, Dental clinic is permissible and the commercial tax would be applicable as per the local municipal slab. 

C. Additionally, you need to pay 12.36% service tax in the event of income exceeds more than 10 Lakh per annum. 
B.T. Ravi
Advocate, Bangalore
733 Answers
29 Consultations
5.0 on 5.0
In the year 2010 the Allahabad High Court in the Judgement of Dr. Shiv Milan Yadav & Ors vs State of U.P. has laid down the principles. 

However it might appear slightly ambiguous at times but my opinion is that the effect of the judgement is to apply the test on a case to case basis. If you consider that your medical practice involves a very simple procedure without emanating much medical waste and without having to use latest machinery and technology then such practice might fall within the category of non commercial use. But in case its not so then the consequences might be different.  there is no absolute rule about it.  

However I suggest to look for a different option considering the fact that an old school practice will not be sustainable in this era and once the practice is established at a certain place it would be difficult to relocate with modern facilities since professionals like doctors and lawyers are closely identified with their place of practice and availability. 

However it would be a good idea to consult a local lawyer who has information on local taxation policy. Sometimes we can only give a very general perspective and it would be best advised to visit a person of meticulous expertise in your scenario.
Saptarshi Banerjee
Advocate, Kolkata
183 Answers
4 Consultations
4.9 on 5.0
Carrying out of surgeries is not permissible unless you get the clcin registered under Medical Establishment Act which is purely a commercial property. I am not sure about any 30% concession. At least no such concession is permissible in WB.
In this situation I find no reason why your place would not be considered as commercial property for which Municipality imposes tax on higher rate.
Devajyoti Barman
Advocate, Kolkata
5161 Answers
54 Consultations
4.9 on 5.0
1)you would need licence under shops and establishment act of your state 

2) you would also need registration under karnataka pvt medical medical establishment act and pay registration fees 

3) you need to provide  50 square feet  reception chamber  , waiting area for patients 

4) consultation chamber should be of area of 150 square feet 

5) you should have provisions for X ray unit , emergency drugs , basic instrument for medical examination and proper bio medical waste disposal system

6) 100 square feet area for each dental chair 

7) fabrication of dentures and prosthetic should be from qualified dental mechanic of certified laboratory only 
Ajay Sethi
Advocate, Mumbai
23123 Answers
1214 Consultations
5.0 on 5.0
1. At first you must ascertain whether it is permissible to commence a clinic in the locality in which you reside.

2. You require permission from the corporation if the law requires you to obtain prior permission. The permission can be denied. 

3. The character of the property will not change from residential to commercial if you operate a clinic from the garage. So no commercial tax should be levied.

4. Registration of clinic is governed by the rules of Medical Council of India, or the rules framed by the state govt. Under the rules of MCI it is not compulsorily registrable. 
Ashish Davessar
Advocate, Jaipur
18063 Answers
446 Consultations
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1. Doctors, Lawyers & CAs do not open Clinics to conduct their business,

2. They conduct their profession by giving advices,

3. Had they opened Nurshing Home, Law Firm or CA Firm in the said residential areas, then their such acts also would have considered as commercial activities.
Krishna Kishore Ganguly
Advocate, Kolkata
12043 Answers
228 Consultations
5.0 on 5.0

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