Property Tax- Types, Methods, Calculation & More

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.

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. House tax is another name for it.

Who Needs To Pay The Property Tax?

Anyone who owns a property whether it's an apartment, a business space, or a piece of land must pay a property tax to the government to use the fundamental civic services offered in and around the property.

What Are The Types Of Property?

In India,  the property is divided into four categories, which aid the government in calculating taxes depending on specified criteria. The country's many property divisions are listed below.

1. Land in its purest form, devoid of any development or enhancement.
2. Immovable manmade creations such as structures and godowns are examples of land improvements.
3. Personal property refers to moveable man-made things such as cranes, automobiles, and buses.
4. Intangible assets

What Are The Methods To Pay Property Tax?

Property tax can be paid through both ways online as well as offline.

Online Process of Paying Property Tax:

• • Log in to the official website of the municipal corporation of your city/ state.
  • Select the tab for property taxes and go to the payment option.
  • Based on the category in which an individual's property fits, select the appropriate form.
  • Fill in the form, and choose the assessment year.
  • Fill in the property identification number as well as any other essential documents referring to the property.
  • After all required information has been submitted, people can pick between credit/debit cards or internet banking as a payment method.
  • After making a payment, grab a printout of the challan for future reference.

Offline Process of Paying the Tax:

To pay the tax offline, you need to visit the municipal corporation office of your city. Offline tax can be paid through cash.

How Property Tax Is Calculated?

Property tax in India is computed in three ways in general:

1. Annual Rental Value (ARV) - The Government/Municipality determines the gross annual rental value of the taxable property through this procedure.
2. Capital Value System (CVS) - The property tax under this system is determined by the current property valuation, which is set by the local Stamp Duty Department.
3. Unit Area System (UAS) - The property tax is based on the projected return from property under the Unit Area System (UAS).

Several additional elements go into deciding your property tax amount. Listed below are a few of them:

1. The taxation authority
2. Type of property
3. Various regions have different civic operations.
4. The property's location, as well as its occupancy status (let or self-occupied), are all factors to consider.

Property Tax Interest

Late payments of property tax can result in a fine, which is usually a percentage of the amount owed. This interest varies by state, with some governments waiving it and others imposing rates ranging from 5% to 20%, depending on their laws.

What Happens When You Fail To Pay Property Tax?

Property tax contributes to local finances, which are used to pay wages to municipal employees such as those who sweep the streets or maintain the area's sewage system. In addition, there is a penalty for nonpayment or late payment. On the amount owed, you will be required to pay a fine in the form of punitive interest. The rate is determined by the authority in question.