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Understanding Property Tax

Property tax is a tax levied by local governments, such as panchayats, municipalities, or municipal corporations on property owners. It is used to maintain local municipal amenities, such as roads, parks, sewage systems, and other infrastructure. Land, structures (commercial or residential), and improvements to land are normally subject to this tax.

What is Property Tax?

Owners of land must pay a yearly property tax to the government-mandated municipal corporation. It's based on the property's entire worth. The tax rate and valuation method vary amongst municipalities across the nation. Real estate taxes are levied on all physical assets, such as buildings, both commercial and residential. Vacant plots or lands with no structures or buildings adjacent to them are exempt from this municipal tax.

Owners must pay property tax by the due date.

How is Property Tax Calculated?

Municipalities determine the taxable amount depending on the assessed value of a property. Property tax is calculated in three ways.

Unit Area Value System

The UAS-Unit Area Value System is based on the per-unit pricing of a property's built-up area. The tax rate per square foot of built-up area is determined by the property's projected market value (calculated depending on the location, land price and usage.)

Several municipalities use this mode of calculation. This is how Kolkata, Bengaluru, and Patna calculate their property taxes.

Rateable Value System

The Rateable Value System (RVS) determines property taxes based on yearly rental value. The sum is determined by the municipality depending on the property size, location, amenities, and condition. Hyderabad and Chennai use this system.

Capital Value System

The Capital Value System is based on a property's overall market value. Every year, cities like Mumbai update and publish this rate.

How to Pay Tax Online?

Several municipalities now accept payments online. You can easily obtain information needed to compute specifics like income tax on land sales and rental earnings. Paying taxes on time also helps with secured loan applications. Borrowers can get up to Rs. 2 lakh loan against property tax provided they use the money according to Section 24(B).

How to Pay Tax Offline?

All around India, "In-the-zone" cash counters are available for property tax payments. For information about the zone, you should visit your local Municipal Corporation's website.

What Are the Different Types of Property?

Among the forms of property on which an owner is required to pay property tax are a house, a flat, a commercial structure, and so on. It should be emphasised that on a vacant plot of land, there is no property tax to be collected. Only a newly constructed structure will draw the same interest.

Property Tax Interest Rate

Property taxes accrue interest if not paid on time. Usually, the rate is between 5% and 20% However, some states don't levy late fees.

The BBMP added a 2% land transport cess to the present property tax rate. It has also recommended doubling the property tax for people who break building codes.

Property taxes in Pune has been increased by a hefty 14%.

Income Tax Deductions on House Property

The following conditions apply to homestead income tax deductions: Rent paid. NAV of the house(s) you rent out except your own. If you own a self-occupied home, no tax deductions apply. Tax exemptions will, thereafter, be subject to Section 24.

BBMP Property Tax

The BBMP - Bruhat Bengaluru Mahanagara Palike property tax is levied on a unit area value basis. The system computes the expected returns from housing property.

MCD Property Tax

Municipal Corporation of Delhi is a sprawling municipal territory that utilises a variety of strategies to improve its infrastructure. The MCD (Delhi) is split into three regions: North Delhi Municipal Corporation (NDMC), South Delhi Municipal Corporation (SDMC), and East Delhi Municipal Corporation (EDMC).

NDMC Property Tax

The MCD-Municipal Corporation of Delhi is a big municipal territory that has numerous techniques to enhance its infrastructure.

It levies tax based on the following slabs:

  • 20% - For properties worth up to Rs.10 lakh.
  • 25% - For properties valued within Rs.10 lakh and Rs.20 lakh.
  • 30% - For properties worth over Rs.20 lakh.

EDMC Property Tax

A similar technique is used by the East Delhi Municipal Corporation (EDMC). It contains 7 colony classifications for 20 property kinds. EDMC property taxes range from 10% to 20%. Homeowners can submit their property taxes online through the websites of their local municipalities.

SDMC Property Tax

If you own a property and live in South Delhi, you must pay property tax. The property tax here is payable to South Delhi Municipal Corporation (SDMC).

Apply Property Tax in Top Cities

Property tax is paid to the government annually and is subject to a late payment penalty of up to 2% per month. It is also worth remarking that the owner, not the occupier, is responsible for paying property taxes.

For property tax in other cities, contact the MCD for Delhi, the NDMC for North Delhi, the SDMC for South Delhi, and the AMC for Bangalore.

Property taxes are complex. To pay the correct tax, you must know how it is calculated, where to obtain it, and when it is due. Online property tax processes are available in some cities. Property owners should know how tax is computed, the payment process, and how to pay their tax.