By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
Investment Simplified
  • Tax
    • Popular Searches
    • What is Form 16?
    • Trademark Registration Fees
    • TDS Full Form
    • Ad Valorem Tax
    • How to Save Tax?
  • Cryptocurrency
    • Popular Searches
    • Benefits of Using Blockchain Technology
    • What Is A Cryptocurrency Hardware Wallet?
    • What is Market Capitalization In Crypto?
    • What Is Staking In Crypto?
    • Investor’s Guide to Crypto Trading
  • Aadhaar
    • Popular Searches
    • How to Book Aadhaar Card Appointment?
    • E-Aadhaar And It’s Benefits
    • What is a Masked Aadhaar?
    • ESign Aadhaar: A Complete Guide
    • Aadhaar Card Address Change
  • Investment
    • Mutual Funds
      • Popular Searches
      • Tax Saving SIP
      • What is Arbitrage Fund?
      • What are Gold Mutual Funds?
      • What are Contra Funds?
      • Best SIP Plans to Invest
    • EPF
      • Popular Searches
      • EPFO Member Portal – Login, Registration
      • EPFO Establishment Search
      • Guide to Your EPFO Member Login
      • EPF Interest Rate
      • What Is UAN Activation?
  • Insurance
    • General Insurance
      • Popular Searches
      • Home Loan Insurance Calculator
      • What is Marine Insurance?
      • How Does a Marine Insurance Policy Work?
      • Types of Marine Insurance in India
      • Types of General Insurance in India
    • Car Insurance
      • Popular Searches
      • Commercial Vehicle Insurance Guide
      • What is Own Damage Insurance?
      • Car Insurance with Zero Depreciation
      • Engine Protect in Car Insurance
      • Return to Invoice Cover Meaning
    • Travel Insurance
      • Popular Searches
      • Domestic Travel Insurance
      • How to Buy Travel Insurance Online?
      • What is Overseas Travel Insurance?
      • International Travel Insurance
      • What is Travel Medical Insurance?
    • Pension & Retirement
      • Popular Searches
      • Commutation of Pension Calculator
      • EPF Pension calculator
      • Public Provident Fund
      • What is Individual Retirement Account?
      • Calculating PPF
  • Banking
    • Bank Timings
      • Popular Searches
      • Bank of Baroda Timings
      • IDBI Bank Timings
      • Union Bank Timings
      • Karnataka Bank Timings
      • Central Bank of India Timings
      • Canara Bank Timings
    • Mini Statement
      • Popular Searches
      • Axis Bank Mini Statement
      • HDFC Mini Statement
      • Bank of Baroda Mini Statement
      • Union Bank of India Mini Statement
      • SBI Mini Statement
    • Balance Enquiry
      • Popular Searches
      • Canara Bank Balance Check Number
      • SBI Balance Enquiry
      • Union Bank Balance Check Number
      • BOB Balance Enquiry
      • PNB Balance Check
    • NEFT
      • Popular Searches
      • HDFC NEFT
      • SBI NEFT
      • Axis Bank NEFT
      • ICICI Bank NEFT
      • Canara Bank NEFT
    • Net Banking
      • Popular Searches
      • HDFC Bank Net Banking
      • SBI Net Banking
      • ICICI Net Banking
      • Axis Bank Net Banking
      • IOB Net Banking
    • Customer Care
      • Popular Searches
      • Central Bank of India Customer Care Number
      • Bank of Baroda Customer Care Number
      • Bank of Maharashtra Customer Care
      • PNB Customer Care Number
      • IOB Customer Care Number
    • UPI
      • Popular Searches
      • BHIM
      • Google Pay
      • BHIM SBI Pay
      • Union Bank UPI
      • HDFC UPI
    • Debit Card
      • Popular Searches
      • SBI Debit Card
      • HDFC Debit Card
      • PNB Debit Card
      • Axis Bank Debit Card
      • Kotak Debit Card
    • RTGS
      • Popular Searches
      • RTGS Process
      • SBI RTGS
      • ICICI Bank RTGS
      • Axis Bank RTGS
      • HDFC RTGS
    • IMPS
      • Popular Searches
      • IMPS Limit
      • IMPS vs. NEFT
      • IMPS vs. NEFT vs. RTGS
      • MMID
    • Cheque
      • Popular Searches
      • Types of Cheques
      • Blank Cheque
      • Cancelled Cheque
      • Account Payee Cheque
      • Banker’s Cheque
    • Bank Holidays
      • Popular Searches
      • Bank Holidays in February 2023
      • Bank Holidays in March 2023
      • Bank Holidays in April 2023
      • Bank Holidays in May 2023
      • Bank Holidays in June 2023
  • About Us
  • Contact
Reading: Property Tax
Share
Investment Simplified
Search
  • Tax
    • Popular Searches
    • What is Form 16?
    • Trademark Registration Fees
    • TDS Full Form
    • Ad Valorem Tax
    • How to Save Tax?
  • Cryptocurrency
    • Popular Searches
    • Benefits of Using Blockchain Technology
    • What Is A Cryptocurrency Hardware Wallet?
    • What is Market Capitalization In Crypto?
    • What Is Staking In Crypto?
    • Investor’s Guide to Crypto Trading
  • Aadhaar
    • Popular Searches
    • How to Book Aadhaar Card Appointment?
    • E-Aadhaar And It’s Benefits
    • What is a Masked Aadhaar?
    • ESign Aadhaar: A Complete Guide
    • Aadhaar Card Address Change
  • Investment
    • Mutual Funds
      • Popular Searches
      • Tax Saving SIP
      • What is Arbitrage Fund?
      • What are Gold Mutual Funds?
      • What are Contra Funds?
      • Best SIP Plans to Invest
    • EPF
      • Popular Searches
      • EPFO Member Portal – Login, Registration
      • EPFO Establishment Search
      • Guide to Your EPFO Member Login
      • EPF Interest Rate
      • What Is UAN Activation?
  • Insurance
    • General Insurance
      • Popular Searches
      • Home Loan Insurance Calculator
      • What is Marine Insurance?
      • How Does a Marine Insurance Policy Work?
      • Types of Marine Insurance in India
      • Types of General Insurance in India
    • Car Insurance
      • Popular Searches
      • Commercial Vehicle Insurance Guide
      • What is Own Damage Insurance?
      • Car Insurance with Zero Depreciation
      • Engine Protect in Car Insurance
      • Return to Invoice Cover Meaning
    • Travel Insurance
      • Popular Searches
      • Domestic Travel Insurance
      • How to Buy Travel Insurance Online?
      • What is Overseas Travel Insurance?
      • International Travel Insurance
      • What is Travel Medical Insurance?
    • Pension & Retirement
      • Popular Searches
      • Commutation of Pension Calculator
      • EPF Pension calculator
      • Public Provident Fund
      • What is Individual Retirement Account?
      • Calculating PPF
  • Banking
    • Bank Timings
      • Popular Searches
      • Bank of Baroda Timings
      • IDBI Bank Timings
      • Union Bank Timings
      • Karnataka Bank Timings
      • Central Bank of India Timings
      • Canara Bank Timings
    • Mini Statement
      • Popular Searches
      • Axis Bank Mini Statement
      • HDFC Mini Statement
      • Bank of Baroda Mini Statement
      • Union Bank of India Mini Statement
      • SBI Mini Statement
    • Balance Enquiry
      • Popular Searches
      • Canara Bank Balance Check Number
      • SBI Balance Enquiry
      • Union Bank Balance Check Number
      • BOB Balance Enquiry
      • PNB Balance Check
    • NEFT
      • Popular Searches
      • HDFC NEFT
      • SBI NEFT
      • Axis Bank NEFT
      • ICICI Bank NEFT
      • Canara Bank NEFT
    • Net Banking
      • Popular Searches
      • HDFC Bank Net Banking
      • SBI Net Banking
      • ICICI Net Banking
      • Axis Bank Net Banking
      • IOB Net Banking
    • Customer Care
      • Popular Searches
      • Central Bank of India Customer Care Number
      • Bank of Baroda Customer Care Number
      • Bank of Maharashtra Customer Care
      • PNB Customer Care Number
      • IOB Customer Care Number
    • UPI
      • Popular Searches
      • BHIM
      • Google Pay
      • BHIM SBI Pay
      • Union Bank UPI
      • HDFC UPI
    • Debit Card
      • Popular Searches
      • SBI Debit Card
      • HDFC Debit Card
      • PNB Debit Card
      • Axis Bank Debit Card
      • Kotak Debit Card
    • RTGS
      • Popular Searches
      • RTGS Process
      • SBI RTGS
      • ICICI Bank RTGS
      • Axis Bank RTGS
      • HDFC RTGS
    • IMPS
      • Popular Searches
      • IMPS Limit
      • IMPS vs. NEFT
      • IMPS vs. NEFT vs. RTGS
      • MMID
    • Cheque
      • Popular Searches
      • Types of Cheques
      • Blank Cheque
      • Cancelled Cheque
      • Account Payee Cheque
      • Banker’s Cheque
    • Bank Holidays
      • Popular Searches
      • Bank Holidays in February 2023
      • Bank Holidays in March 2023
      • Bank Holidays in April 2023
      • Bank Holidays in May 2023
      • Bank Holidays in June 2023
  • About Us
  • Contact
Investment Simplified > Tax > Property Tax
Tax

Property Tax

Lakshey Bahl
Lakshey Bahl May 11, 2022 11 Min Read
Updated 2022/09/12 at 12:13 PM
Share
SHARE

If you are going to buy a home or have already made an investment, you must be aware that the government levies various taxes at different times. You must have heard the term “property tax” and wondered what is property tax in India? Read on to understand.

Contents
What is Property Tax?How to Pay Property Tax Online?Interest on Property TaxHow is Property Tax Calculated? Different Methods of Calculating Property Tax Tax Deductions against Income from PropertyWhy Do We Have to Pay Property Tax?Importance of Paying Property TaxExemptions on Property TaxPenalty for Non-payment of Property TaxProperty Tax vs GST: Know the DifferencesConclusion FAQs

What is Property Tax?

The yearly sum paid by a property owner to the local government or municipal corporation in their respective regions is known as property tax. All tangible real estate property, residences, office buildings, and rented properties attract a property tax.

Property tax can be paid yearly or semi-annually, and it varies for different cities, states, and even different regions within a state. However, the state government establishes the basic rates that can undergo assessment.  

How to Pay Property Tax Online?

Now, that we know what is property tax in India, here are the steps that can help you pay property tax online:

  • Open the municipal/state website
  • Select Citizen services
  • Select property tax and mention property ID
  • Check the name and address and pay via net banking or credit card.

Your property tax can be paid at the municipal corporation office in your region, or at specific banks in affiliation with the Municipality.  To identify your property, you may need to supply the assessment tax number. 

Now, you must be wondering what is assessment number in property tax? Well, the assessment number refers to the value assigned to a property for property tax payment. It is imperative if you wish to pay your property tax online.

What is property tax

Key Takeaways

  • Property tax is the yearly payment to the government on any “real property” you own. 
  • Taxes on ready-to-move-in properties are significantly cheaper than those on under-construction properties.
  • Besides stamp duty, registration fees, and GST on property tax, 1% of TDS must be paid.

Interest on Property Tax

What is property tax in India and what is the interest on it are some common questions that need an answer. Late payments towards property tax can lead to fine. This fine is usually equivalent to a certain percentage of the due amount.

This interest varies from one state to another, wherein some states are looking to waive off this interest and some others are changing the interest rate from 5 per cent to 20 per cent, depending on the individual policies.

How is Property Tax Calculated?

A question that comes to mind after understanding what is property tax is its calculation. Property tax in India is levied as per the location of the property, with rates varying from state to state.

Property tax calculation is done by different municipalities in different ways, but the overall outline of such computation stays the same in every state.

Different agencies employ various formulas. The civic agencies responsible to calculate the tax can do so using any formula they find suitable once all the potential aspects’ assessment is done.

What is property tax

Different Methods of Calculating Property Tax

Municipalities use one of the  three distinct methods to determine property taxes, and they are:

  • Capital Value System – As per this method, the tax imposition is done as a proportion of the property’s market value. The government determines the market value of the property based on its location. Every year, the market value undergoes review.
  • Unit Area Value System –  Under this system, the tax value is based on the per-unit price of the built-up area of the property.
  • This valuation is done by the estimation of returns on the property with respect to the place, utilization, and land price. 
  • This valuation then undergoes adjustment by the property’s built-up area to determine the tax valuation.
  • Annual Rental Value System –  With this system, the tax calculation is based on the rental value obtained from the property in a given year. It does not have to be the actual income from the property.
  • The municipal authority, on the other hand, determines the rent valuation, which is based on the location, size, and condition of the property. The proximity of the property to landmarks and other key facilities is also taken into account at the time of its valuation.

There are a few municipalities that provide an exemption from paying property taxes depending on characteristics such as Kind of property, age, geography, Individual net income, and more.

It is important to properly verify with the local authorities for such information and to appraise the property’s worth with diligence.

Tax Deductions against Income from Property

So, is it important to simply understand what is property tax or is there more to it? Well, there is certainly more to the question ‘what is property tax?’ than a simple definition. Read on to understand.

  • Municipal tax- Municipal tax is the amount paid annually to the municipal corporation of the area.
  • Municipal taxes are deducted from the gross yearly value in order to derive the net yearly property value.
  • Standard deduction- This type of deduction is done irrespective of the actual property expenditure be it insurance, water supply, electricity or even repairs.
  • For a self-occupied type of house property since the annual value is nil, the standard deduction on such a property is also zero.
  • Deduction of interest on a home loan- Homeowners can choose to claim a deduction of up to Rs 2 Lakhs on the home loan interest if the owner of the property or his family live in the house property. This same treatment is also applicable if the house is vacant.

Why Do We Have to Pay Property Tax?

It is now quite clear as to what is property tax, but why is it so important to pay property tax? Property tax is also known as a house or municipal tax and includes the collection, imposition, and assessment of property owners by a specific municipal authority.

This tax helps with the upkeep and maintenance of local amenities such as footpaths, sewage systems, roads, streetlights, and parks for the convenience of the civilians.

Importance of Paying Property Tax

Property taxes are a significant part of the ownership of the home. Homeowners can either have taxes added to mortgage statements or they can choose to pay them in a separate way. Both ways, it is imperative to pay property tax.

Governments assess property tax based on value and location. These taxes paid by the homeowners help fulfil vital services like highway construction and other important uses which differ with different jurisdictions.

Exemptions on Property Tax

House property owners can avail of exemption from property tax u/s 24. The exemptions can be as follows:

  • If property owners do not live in the house they have taken a loan for they will be exempt from paying the entire interest rate with no fixed upper limit.
  • If the house owners do not reside in a property as they are living in a different city due to business or employment and they have rented or purchased a house, they are eligible to claim exemption on the rate of interest but only up to Rs 2 Lakhs.
  • In case of failure to complete the construction in three years, they can only claim an exemption up to Rs 30,000.
  • There are no deductions on commissions or brokerage for the purpose of arranging tenants or loans for the owners of a house.
  • House owners need to complete the construction within three years of taking the loan to claim the maximum exemption of Rs. 2 lakh.
  • Owners of the house need to complete the construction within a time span of 3 years after taking a loan in order to claim the maximum exemption of Rs 2 Lakhs.
What is property tax

Penalty for Non-payment of Property Tax

You have to pay a late payment penalty for paying your property tax after the due date. This penalty can be as high as 5-20 per cent of the due amount. This amount can be quite a lot if you own a large-scale property or a property in a posh location.

Property Tax vs GST: Know the Differences

  • GST is the tax on the sale of goods. Property tax, on the other hand, is the annual payment on property you own.
  • GST collection is done by both state and central governments, whereas property tax collection is only done by the former.
  • GST is a type of commercial tax. Property tax, however, is levied on the ownership of both residential and commercial properties.

Conclusion

Property tax is a mandatory direct tax payable to the government on the property you own. It is set by the government and can either be the local or the municipality government.

FAQs

1. What happens if property tax is not paid in India?

In case of delay or default of payment of the property tax, you will be levied a penalty for delay or failure of the payment. You will have to pay interest on the amount owed as the penalty charges. Every state has a different penalty for default. For example, in Delhi, you will be charged 1% every month on the tax amount by the MCD.

2. Why do you have to pay property tax?

Taxes are the primary income of the government. To maintain and establish new infrastructure and facilities for the citizens and also for the proper functioning of the government. Citizens pay some amount to the government as a tax. In the same way, property tax is collected to finance the cost of public expenditure and renovations and maintenance. 

3. Do you have to pay property taxes on the house you reside in?

If you own only one house, and you live in it, you will be exempted from paying any property taxes but if you own more than one house, and you are earning rent from there, in that case, you will be liable to pay the taxes.

4. Are there any exemptions to property tax?

There are a few exemptions such as  Kind of property, age, geography, and individual net income. Apart from these aspects, everybody is liable to pay their property taxes without any delay.

5. Why is GST not applicable on ready-to-move-in properties?

Ready-to-move-in homes do not meet the threshold for GST taxes because there is no sale of goods or services included, only stamp duty and registration fees are paid on them.

6. Is there any way I can get an exemption from property tax?

Tax deductions u/s 80C come into the picture in cases of a newly purchased house. The owners of the house can claim deductions on registration charges and stamp duty which is usually up to 10 per cent of the amount at which the property (House) was purchased initially. The highest amount that can be deducted u/s 80C is Rs 1.5 Lakhs.

7. Do I have to pay property tax on agricultural land?

Agricultural land is not a capital asset so there is no tax applicable on the sale of this type of land.

8. Do you pay property tax every year in India?

Property tax needs to be paid on an annual basis and late payments can attract a fine in the form of interest rate on the due amount, which can range up to 2 per cent a month.

Also Read: What is Stamp Duty?

Share this Article
Facebook Twitter Whatsapp Whatsapp Email Print
Previous Article How To Get GST Number How To Get GST Number: A Comprehensive Insight
Next Article aadhar form Everything You Need To Fill An Aadhaar Enrollment Form
Leave a comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Popular Searches
  • Ad Valorem Tax Meaning
  • Income Tax Form
  • What Is Property Tax
  • What Is Municipal tax
  • What is Professional Tax
  • How To Calculate TDS
  • TDS Full Form
  • What Is Tax
  • Calculate Income Tax
  • How To File GST
  • What Is Form 15G
  • Trademark Registration Fees
  • GST Number Check
  • What Is Tax Saving
  • How To Pay Professional Tax
  • Different Type of Taxes
  • ITR Acknowledgement
  • What Is Corporate Tax
  • GST Full Form
  • What Is TCS Tax
  • Get GST Number
  • GST Registration Fee
  • What is GST Rates
  • What Is HRA

Social Media

Social Media
Facebook
YouTube
Instagram
Twitter
Linkedin

calculator

Loan CalculatorMortgage Calculator
Mortgage CalculatorMortgage CalculatorLoan CalculatorLoan Calculator
₹
%
years
%
₹per year
₹per year
%

₹
years
%

Recent Post

Union Bank Holidays
Union Bank Holidays List 2023
February 1, 2023
Indian Bank Holidays
Indian Bank Holidays List 2023
February 1, 2023
Kotak Bank Holiday
Kotak Mahindra Bank Holidays List 2023
February 1, 2023
Axis Bank Holiday
Axis Bank Holidays List 2023
February 1, 2023

You Might also Like

TDS Challan

TDS Challan: How to Download & Make Payment Online

TDS Challan is a document used by taxpayers in India to pay…

Read More
ppf

PPF Login Process, Registration and Account Opening

You must've heard this over the radio or television, and it goes…

Read More
Tax Saving

Learn the Basics of How to Save Tax

If you were to think of things that you dread but can’t…

Read More
Union Bank Debit Card

Union Bank Debit Card

Union Bank of India provides Visa, RuPay and MasterCard debit cards in…

Read More
IS logo 250px

We are here to make your investment journey simple by delivering content on financial topics in plain English.

Categories

  • Tax
  • Cryptocurrency
  • Aadhaar
  • Mutual Funds
  • Banking
  • General Insurance
  • Pension & Retirement
  • Car Insurance
  • Travel Insurance

Quick Link

  • About Us
  • Contact
  • Terms & Conditions
  • Privacy Policy
Social Media
Facebook
YouTube
Instagram
Twitter
Linkedin

We are here to make your investment journey simple by delivering content on financial topics in plain English.

Categories

  • Tax
  • Cryptocurrency
  • Aadhar
  • Mutual Funds
  • General Insurance
  • Pension & Retirement
  • Car Insurance
  • Travel Insurance

Quick Link

  • About Us
  • Contact
  • Terms & Conditions
  • Privacy Policy

Social Media

Copyright © 2022 Investment Simplified. All rights reserved.

Welcome Back!

Sign in to your account

Lost your password?