Property/House Tax is the amount the property owners pay either to the area’s municipal corporation or the local government. The taxable amount to be paid is based on the size, area, construction type, etc. of the property. The collected tax amount is used by the government in maintaining the area’s amenities like parks, roads, sewage, etc.
Being a real estate website in India, we believe that having adequate knowledge about Property Tax in the country is of great significance. So let’s know about it.
Types of Property in India
Properties in India are categorized into four:
- Land
The land should be in its rawest form, with no construction or modifications on it.
- Improvements made on the Land
These include those constructions on the land that are man-made and immovable such as buildings.
- Personal Property
Such properties include man-made vehicles like cars, buses, trucks, etc.
- Intangible Property
Properties that cannot be seen or touched like royalties and patents.
Calculation of Property Tax in India
Property tax is calculated differently in different states of India. To calculate the tax, one considers aspects like type of property, location, occupancy status, floor and carpet area, number of constructed floors, etc. Following are the methods to calculate property tax in India:
- Capital Value System
Here the tax is imposed on the percentage of the property’s market value. Based on the property location, the state government determines the market value of the property on annual basis. The government then makes it public on multiple platforms. Municipal authorities of Mumbai use this method to calculate tax.
- Unit Area Value System
Here, the tax is imposed on the per-unit prices of the property’s built-up area. Based on the property usage, location and price, the per-unit price is calculated. To calculate tax, this price is multiplied by the total built-up area of the property. Municipalities in Kolkata, Delhi, Patna, Bengaluru, etc. use this method.
- Annual Rental Value System
Here, tax is calculated on the annual rental value of the property. The rental value is decided by the municipal authority on the basis of the property size, amenities, location, and landmarks. Municipalities of Chennai and Hyderabad use this method for tax calculation.
- Payment of Property Tax in India
Property tax is either paid at the municipal corporation of the area where the property is located or at banks tied up with the corporation. Taxes are now also collected on the official websites of the municipalities. While paying online, one must keep in hand the property tax number or Katha number of the revenue survey number.
Interest rate on Property Tax
When an individual is not able to pay tax on time, he is liable to pay interest. The interest rate varies from state to state. The percentage of interest rate on a property tax usually varies from 5-20%.
Exemptions on Property Tax
One can claim exemptions on Property tax based on the following factors:
- Age (If you are a senior citizen)
- Location (If your property is constructed in a famine zone or such areas)
- Your Net Income
- Property type
- Your history in public-serving
Besides, you are the owner of vacant land, property tax is not for you.
Conclusion
Property tax calculation is indeed important. You cannot avoid it if you have land with construction done over it. We hope these points helped you in getting knowledge about various aspects of Property tax in India. If you have further queries related to the subject, you can connect with our experts at Truehomes24.
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