Property Tax India

The sum paid by the landowner to the municipal corporation or local government for his or her region is known as property tax. Every year, the tax must be paid. Real estate assets include property, office buildings, and residential residences that are rented out to third parties.

What is Property Tax in india

  • The government levies a property tax on every tangible real estate that an individual possesses. Residential residences, office structures, and premises rented out to third parties are examples of real estate assets. It's also known as property tax.
  • Your home, an office, a store, a building, or some land belonging to the building, such as a parking lot, are all examples of house properties. There is no distinction between a business and a residential property under the Income Tax Act. In the income tax return, all sorts of properties are taxed under the heading "income from house property."

a. Self-Occupied House

  • A self-occupied residence is utilised for personal purposes. This could be the taxpayer's family – parents, spouse, and/or children. For income tax purposes, a vacant dwelling property is considered self-occupied.
  • Before FY 2019-20, if a taxpayer owns more than one self-occupied residential property, only one is considered and handled as a self-occupied property, with the others believed to be rented out. It is up to the taxpayer to decide which property to declare as self-occupied.
  • The benefit of treating the dwellings as self-occupied has been expanded to two houses for FY 2019-20 and beyond. For income tax purposes, a homeowner can now declare his two homes as self-occupied and the remaining house as rented.

b. Renting Out Your House

For income tax reasons, a house property that is rented for the entire or part of the year is referred to as a let out house property.

c. Inherited Wealth

Based on the usage stated above, an inherited property, such as one left by parents, grandparents, or others, can be either self-occupied or rented out.

Pay property tax india online

The internet has had a significant impact on how the world works, creating new opportunities and making life easier. Property tax payment used to be a major bother, but that is no longer the case, thanks to the possibility of paying property tax online. Most municipalities offer the option of paying property taxes online, which streamlines the procedure and saves time.

Step 1: Go to their municipality's or city corporation's official website.

Step 2: Select the tab for property taxes and go to the payment option.

Step 3: Based on the category in which an individual's property fits, select the appropriate form (either 4 or 5). These forms are used to see if there have been any modifications to the property in question.

Step 4: Decide on an assessment year. The year in which property taxes must be computed and paid is this one. Most businesses offer a way to pay off property tax debts that have accumulated over time.

Step 5: Individuals must next provide their property identification number as well as any other pertinent information about their property (such as the zone in which it is located, the property type, and so on), as well as the owner's name.

Step 6: After all required information has been submitted, people can pick between credit/debit cards or internet banking as a payment method.

Step 7: After making a payment, grab a printout of the challan for future reference.

Note: These are the basic processes for paying property taxes online; however, they may differ based on the city/town corporation.

Property Taxes calculation

  • In general, municipal governments calculate property taxes using one of the three techniques listed below:
  • Property taxes are determined using the Capital Value System (CVS), which is based on a percentage of the property's market value. The government determines the market value of a property based on the location of the property. In the city of Mumbai, this valuation system is used.
  • Unit Area Value System (UAS): The tax valuation under the Unit Area Value System (UAS) is based on the per-unit price of the property's built-up area. This price is determined by the property's predicted returns based on its location, usage, and land price. The tax valuation is calculated by multiplying this value by the property's built-up area. This strategy is used by several local governments, including Patna, Bengaluru, Delhi, Hyderabad, and Kolkata.
  • Annual Rental Value System (RVS) or Rateable Value System (RVS): The RVS or Annual Rental Value System calculates the tax based on the rental value received from the property over a year. This does not have to be the actual rent collected from the property. The municipal authority, on the other hand, is in charge of determining the rent valuation, which is based on the property's location, size, and condition. At the time of valuation, the property's proximity to landmarks and other key amenities is also taken into account. This form of tax calculation is used in areas of Chennai and Hyderabad.

Frequently asked questions

Is the property tax set by the government the same everywhere?

No, your local administration — that is, urban local entities such as Municipal Corporation and similar organisations – determines your property tax.

My landlord claims that I, as a renter, am responsible for paying the property tax. Is that permissible?

No, in some countries, tenants are responsible for paying property taxes, but in India, the property owner is responsible for paying the tax. You can sue your house owner in civil court if he is forcing you to pay this amount.

Is there any chance I can acquire a property tax exemption?

You may be eligible for a property tax exemption based on your age (if you are a super senior citizen, for example), net income, kind of property, location of the property (if it is in a famine zone or other impacted areas), public service history, or taxable property valuation. You are not required to pay property tax on an empty plot of land. For more information, you should contact your local government.

What is the reason for my property tax assessment being greater than the value of my home?

Either you are unaware of the market value of your home or your estimation is incorrect. It is preferable to seek clarification from your local government. The tax law will also explain why the tax rate is so high.

Is it possible to pay my property taxes online?

This is determined by your local government. You can use the online property tax payment option if it is available. Bengaluru, for example, has only lately begun accepting online property tax payments.