Property Tax: Basic facts about this state levy you need to know

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Published: June 22, 2018 2:50:18 PM

The dates of payment of Property Tax are approaching. This tax is paid by property owners on "real assets". This is your ultimate guide to understand this state levy.

Property Tax Property tax is assessed by respective municipalities. House owners pay this tax.

Property Tax is collected by your state government, unlike income tax from house property which is the prerogative of the central government. For obvious reasons one should have an awareness involving this tax which has not been subsumed under GST.

What’s property tax?

Property tax is India is levied on “real property”. This includes improvement made to land like buildings, go-downs, factories, shops, residential houses etc. A vacant plot of land without any adjoining construction is not liable to be taxed. Property tax is also called house tax. It is called Mileage tax in some countries.

Who levies the property tax?

Property tax is different in different states. It is the duty of the municipality of an area to assess and determine the property tax. The assessed amount varies from location and it is different in different in cities. The amount is utilized towards public services like infrastructure repairs and maintenance. The rates also varies from municipality to municipality depending on the industrial, commercial and residential usage of the property.

AlSO READ: 5 reasons you should pay your property tax on time

How is it calculated?

Different civic corporations use different rates and methods to calculate the tax. Broadly, the tax varies according to base value, built up area , the type of the building, category and floor factor. The tax can be easily calculated online on the official website of the municipal corporation concerned. The different methods of calculating this tax is mentioned below

  1. Annual rent value–  It is the amount of the property which might be let out on a yearly basis. In a case of self-occupied property used for staying by the owner, then the value is zero. In a situation where the owner is neither staying nor letting it out then also, the value is zero. The gross annual rent of the property is fixed by the municipal body which is generally higher of the actual rent received or expected rent. The municipality of Chennai and Hyderabad use this method
  2. Capital value system- The market value of the property is the basis of estimating the taxes to be paid. This market value is determined by the government and revised annually, based on the ward in which the property is located.
  3. Unit area system- Under this system, the tax is levied on the per unit price of carpet area or the built-up area of the property. Municipalities like New Delhi, Bangalore, Kolkata follow this method.

 Who is liable to pay the property tax?

In India house owners are liable to pay the tax. If you have been forced to pay the tax as a tenant then you can redressal in the civil court. Moreover, the owner for the purpose of payment of taxes include deemed owner.

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