Congratulations on your decision to become a homeowner in India! While purchasing a property is undoubtedly an exciting milestone, it’s crucial to familiarize yourself with the various responsibilities that come with it. One such obligation is property tax, a levy imposed by the government to finance local public services. In this comprehensive guide, we’ll delve into the intricacies of property tax, explaining what it is, why it matters, and how it is calculated. So, let’s get started!
What Property Tax?
Also known as house tax or municipal tax, is a recurring fee levied on real estate properties by local governing bodies, such as municipal corporations or panchayats. The revenue generated from taxes is utilized to provide essential services such as maintenance of roads, sewage systems, street lighting, parks, and other public amenities.
Why Property Tax?
Playing a vital role in sustaining the infrastructure and services within your local community. It is a fundamental source of revenue for the government, enabling them to provide the necessary amenities and ensure the overall development and upkeep of the area. By paying your tax, you contribute to the improvement of your locality, creating a better living environment for yourself and your neighbours.
How to Calculate
Calculation can vary slightly across different states or municipalities in India. However, the basic principles remain relatively consistent. Let us look at the primary ways in which tax is calculated:
Property’s Annual Rental Value (ARV): The ARV is an estimate of the property’s potential annual rent if it were to be rented out. The municipal authorities determine the ARV based on factors such as the property’s size, location, amenities, and market rates. The ARV can also be determined using either circle rates or ready reckoner rates. Hyderabad and Chennai are two municipalities that follow this system of property tax.
Unit Area Value (UAV): The UAV is the predetermined value assigned to each square foot or square meter of property in a specific locality. It is established by the government based on factors like the property’s age, type, location, and infrastructure facilities. Municipalities of Delhi, Kolkata, Bengaluru, Patna, and Hyderabad follow this system for property tax calculation.
Capital Value (CV): The CV is calculated as a percentage of the market value of the property. The market value is determined by the government and depend upon the location and locality of the property. Mumbai is the only municipality that follows this system.
Here are some of the factors that are considered when calculating property tax:
- The location of the property
- The size of the property
- Year of construction
- Type of construction (multi-storied/single floor/kutcha or pukka structure)
- Property situation (under-construction or ready to possess)
- The owner’s gender (female property owners may get a concession)
- The owner’s age (Senior citizens may get to enjoy discounts on property tax)
- The variety of civic services/facilities provided by local municipal governments.
- After accounting for all variables, the following formula is used by local municipal bodies to calculate property tax:
- Property tax = built-up area x age factor x building type x category of use x floor factor
Process of Paying Online
In India, the process of property tax payment also varies depending upon the state and local municipality regulations. To familiarize yourself with the process, we have outlined a step-by-step procedure.
Step 1: Log in to your municipality’s/city corporation’s official website.
2: Choose the property tax tab and then navigate to the payment option.
3: Select the appropriate online application form based on the category under which your property falls. These forms are used to determine whether any changes have been made to the property under consideration.
4: Fill in the requisite details in the application form including location, property type and other important details.
5: Select the assessment year. This amounts to the fiscal year in which property taxes must be calculated and paid. Also, check the previous years if any pending dues need to be cleared.
6: Next enter your property identification number and any other relevant documents pertaining to their property (zone under which it falls, property type, etc.), including the owner’s name.
7: After all relevant information are filled, you can select the mode of payment, which can be credit/debit cards or internet banking.
Step 7: After the payment is done, you can take a printout of the challan for their records.
It’s crucial to pay your property tax before the specified due date mentioned in the property tax notice to avoid any penalties or late fees. If you miss the deadline, you may have to pay additional charges or interest on the outstanding amount.
Payment Options
There are various methods available for property tax payment in India, including online and offline options. Online methods often include payment through the official website of the local municipal corporation or through mobile applications. Offline methods generally involve visiting designated payment centers, such as municipal offices or authorized banks, and paying via cash, cheque, or demand draft.
Online Payment Process: If you choose to pay property tax online, you need to visit the official website of your local municipal corporation. Look for the property tax payment section or e-services section and follow the instructions provided. You will typically need to enter your property details, assessment number, and other relevant information. Then, select the payment method, such as net banking, debit/credit card, or online wallets, and proceed with the payment.
Offline Payment Process: For offline payment, you can visit the designated payment centers mentioned in the property tax notice. Collect the payment challan or form, fill it with the required details, and submit it along with the payment amount. You may be provided with a receipt as proof of payment.
Understanding property tax is crucial for every homeowner in India. By paying your property tax, you contribute to the development and maintenance of your local community. We hope this comprehensive guide has provided you with valuable insights into property tax, including its calculation, payment process, and associated factors. Remember to stay updated on any changes made by your local governing body and pay your property tax promptly to avoid penalties. Being a responsible citizen not only benefits you but also contributes to the betterment of society as a whole.
