Property tax is the annual amount paid by a landowner to the local government or the municipal corporation of his area. The property includes all tangible real estate property, his house, office building, and the property he has rented to others.
The property tax levied on tangible real estate properties and is a major source of revenue for the government. The term “property” refers to all tangible real estate under the ownership of an individual. This includes houses, office buildings, premises rented to other parties, etc.
The rate of the tax usually varies between municipal authorities across India. The municipal corporation assesses each area and determines the property taxes annually or semi-annually. The amount of tax depends on the area, construction, property size, building, etc.
Property in India has been divided into four classifications.
Portable man-made property. For example, cars, buses, and cranes
Land in its most basic form, devoid of any form of construction
Tangible Man-made constructions
Properties that do not have physical substances. For example, patent, copyright, royalties, etc.
The calculation of the property taxes varies based on several factors as listed below:
○ the state/municipal corporation
○ State of occupancy (rented or self-occupied)
○ Type of property – Residential or Commercial
○ Floor area, carpet area, built-up area, Floor Space Index, etc.
○ Age of the property
The formula used for calculating property tax is as below:
Property tax = base value × built-up area × Age factor × type of building × category of use × floor factor.
It is important to note that the amount of property tax is based on where the property is located, the assessment method of a particular municipal corporation, building use, age of the building, etc. The tex amount varies from municipal to municipal across India, but the evaluation method remains the same as above.
This system calculates the taxes based on the per-unit price of the built-up area of a property. The tax slab per sq. ft. depends on the expected market value of that property. This system is used for the calculation of property tax by the AMC.
This system calculates the property tax from the percentage of the market value of a property. The government decides the market value based on the locality and other factors.
This system calculates the property tax on the rental value of the property. The gross annual rent of the property is fixed by the municipal body.
Answer: The property tax is charged by the Government and the owner of real estate are bound to pay that. The tax amount is assessed and collected by local governing bodies or Municipal corporations.
Answer: No, you don’t have to pay the Local property tax if you are a rent-paying tenant and your lease is for less than 20 years.
Answer: Both are preferable, the only thing you need to keep in mind is to pay before the due date.
Answer: The floor used as a house will be treated as a self-occupied house property. The floor used to run the business will not be taxed under “Income from house property” but it shall be taxed under the “business profession” head.
Answer: Yes. Get advice and suggestions on the property tax from experts. Please write down all your doubt related to the property taxes.