What is a property tax and when is it paid?

The amount collected by property taxes will be used for the maintenance of local infrastructures such as road and school maintenance and road repair. Property taxes vary by location, city, or town in the city.

To assess your property’s tax liability, factors such as the property area and location are taken into consideration. These factors then go into a model which will arrive at a monetary value of all the property that you own and the tax will be levied at that value.

Generally, it can be observed in India that property tax rates tend to be higher in metro cities as compared to municipalities and panchayats.

Property tax can be paid through various means, including both offline and online methods. For instance, you can choose to pay your property tax dues by visiting the local authority office in charge of collecting these taxes, or by visiting the specified banks which have the option of collecting property tax. You will need to carry the documents and previous receipts for them to be able to file the tax against your property.

Otherwise, you can also avail of an online facility on offer by most major states and their local authorities to pay property tax from the comfort of your home. You can choose to log on to the relevant website and file taxes using the documents and pay using net banking or your debit cards

However, it must be ensured that the payment is made on time as a delay in paying could attract an interest of about 2% per month after three months of service of bill. It is important to note here that property tax payment is the responsibility of the owner of the property irrespective of the actual occupant there.

Types of Property Tax :

Property in India has been divided into 4 types :

1. Personal Property: Portable man-made property such as vehicles, busses, and cranes
2. Land: Land in its most basic form, devoid of any kind of structure.
3. Intangible property: Property that isn't physical.
4. Land improvements and upgrades: include man-made structures on land that can't be moved, such as buildings.

You must, therefore, ensure that your property is classified in the correct category. Property tax is generally levied on the annual rental value of your property. Some local authorities may offer certain property tax exemptions, which are based on circumstances such as location, age, owner's net income, type of property, etc.

For example, if you own a property in Gurugram then you will have to follow the rates of Gurgaon to calculate and pay your property tax liability. The tax payable on the property is based on two factors i.e. area & use (residential/non-commercial and commercial).

Since different localities follow different rules for calculation, there are different ways to calculate property tax :

1. Capital Value System (CVS): In the city of Mumbai, this valuation system is used. The property tax is determined as a percentage of the market value of the property. The government determines the market value of a property based on the location of the property.
2. Unit Area Value System (UAS): Many municipalities such as Patna, Bangalore, Delhi, Hyderabad, and Kolkata follow this method. The unit area value system or UAS tax assessment is calculated based on the unit price of the city where the land is situated. This price is based on the expected return on the property by location, usage, and land price. Multiply this value by the building area of the asset to derive a tax assessment.
3. Annual Rental Value System or Ratable Value System (RVS): Chennai and Hyderabad follow this tax calculation method. Taxes are calculated based on the rental value obtained from the property for one year. However, it is a rent assessment determined by the municipality and is based on the location, size, and condition of the property. The proximity of the property to attractions and other related facilities is also taken into account during the evaluation.

But, one must check the property tax liability online as the rules continue to evolve with time and use cases.

Due date of property tax

Due date of property tax varies from state to state. Some examples are as follows-: