How Property Tax Works in India ?

A complete guide about Property Tax in India

Property tax is an advance that Municipal Corporation or local governing bodies levies on all tangible realty assets of their respective area. In India, every property owner is liable to pay property tax to help the Government upkeep maintenance of public services.

Property tax online payment makes it easier for taxpayers to clear their annual dues on time.

Let’s know more about this tax in detail!

What is Property Tax?

Government bodies like Municipal Corporations or Panchayat levy a sum on all tangible property of their governing areas. The owners of the properties are mandated to pay the sum annually or semi-annually.

This property tax applies to any property that a person possesses, such as residential, commercial or let-out property. The tax payable depends primarily on the property value, location and the law of that particular area.

Also known as house tax, it is a primary income source for the Government that is further used to repair, maintain and develop the local infrastructures like parks, roads, pavements, etc.

For more convenience, several taxing entities have introduced a property tax online payment facility.

Know the various property tax types relevant in India.

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What are the types of Property Tax in India?

Categorically, property tax is an example of direct tax. However, to simplify the assessment and calculation of property tax online and offline, it is divided into four parts, based on different types of property. Here’s the list.

Land - It is in its initial form devoid of any construction or alteration.
Personal property - It can be any movable asset like cars, two-wheelers, cranes, buses, etc.
Development made to land - Anything built on the plot and immovable such as buildings, storerooms, etc.
Intangible property – Things, which are in intangible form like patents, licenses, etc.

Depending on any of the type, property tax payment amount is determined in the country.

The next segment shows the property tax calculation process.

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How Is Property Tax Calculated?

Generally, property tax in India is calculated in three different ways.

Annual Rental Value (ARV) - In this process, the gross annual rental value of the taxable property is determined by the Government/Municipality. Cities like Delhi, Chennai, etc., follow this system to calculate tax.

However, first, you need to estimate the yearly property value. For example, residents of Chennai follow the below-mentioned formula.

Rental Value (Monthly) = Plinth Area* Basic Rate per sq ft.

Rental Value (Annual) = Monthly rental value*12- 10%

Capital Value System (CVS) - In this system, the property tax depends on the current property value, which the local Stamp Duty Department fixes. Mumbai follows the formula below to determine the property tax payable.

Following is the property tax calculation formula that is used to estimate the amount payable.

Property tax= base value* property type* age factor*built-up area*floor factor*usage category.

Determine the property value from a particular zone and multiply it with the carpet area of the property.

Unit Area System (UAS) - Here, the property tax depends on the expected return from a property. The cities like New Delhi, Kolkata, Bangalore, etc., follow this system. Following is the process to arrive at the annual value of a property.

Annual Value- Unit Area Value* Carpet Area Value*Use Factor*Age Factor*Occupancy Factor*Structure Factor

Besides, other factors also play a part in determining your property tax bill. The following are some of these -

The taxing agency
Property type
Difference of civic operation of different regions
The locality of the property, occupancy status like let out or self-occupied, etc.

You can easily get hold of an online property tax calculator that can compute your property tax in a matter of seconds.

Such calculation eventually aids in property tax online payment. However, taxpayers also need to understand the exact procedure for clearing these taxes.

Know more about: Property Insurance in India

How to Pay Property Tax?

Pay property tax bill online or offline in simple ways. Check it out.

Offline- The local municipal offices accept such payments offline. You can look for the specific counter accepting property taxes in the office premises. Don’t forget to collect the property tax receipt and keep it for future references.
Online- Gradually, property tax online payment is getting popular. Enter relevant details and complete the transaction. However, each state follows a slightly different procedure for tax collection. Thus, before proceeding, always verify whether your concerned municipality accepts tax payments online.

Since the online process is much more straightforward and faster, it is ideal to know how to pay property tax online.

Property Tax Online Payment Process

Follow the steps mentioned below to ensure a smooth property tax online payment.

Step 1: Visit the official Municipal website and log in using basic information.
Step 2: Open the property tax payments tab and follow the instructions.
Step 3: Select the right property tax online application form and enter the property type, location, etc.
Step 4: Enter the assessment year carefully. Besides current years, choose previous years as well to clear any dues.
Step 5: Mention property identification number, Revenue Survey number, plot number, etc.
Step 6: Choose a preferred payment option like credit cards, internet banking, etc., to complete property tax online payment.

After successful payment, check the property tax status to ensure that all dues have been cleared.

How to get a Tax Application Number

If you are opting for property tax online payment, knowing the tax application number is crucial.

Follow the steps to know the new application number online.

Open the property tax page of your local Municipality.
Click on “GIS-based New PID”.
Find “To Know Your New PID Click Here” at the bottom of the page.
Enter the old application number and click on “search”.
Select name and open “Fetch”
The details will appear on the screen. Check the details for discrepancies.
For more information, click on “View your property in Map.”
Spot the property on Google Map.
Download or save details.

Make necessary alterations at such times. For instance, you can change your name in property tax online if entered incorrectly.

How to download Property Tax Receipt / Challan Online?

After paying property tax in India, it is essential to keep a copy of the receipt. Follow the steps to save it for future references.

Visit the online portal of your concerned Municipal Corporation.
Log in to the Citizen account with OTP.
The property tax payment details will appear on the next page.
Select “Actions” from the extreme right of the row.
Click on “tax paid details” and select “download receipt”.
Click on “Download PDF” to complete the download.

Moreover, paying the property tax on time is also essential to avoid penalty charges levied in case you cross the property tax due date.

Remember Important Dates of Property Tax

The following table contains a city-wise deadline for property tax online payment.

City	Last date to pay property tax in 2021
Delhi- NCR	30th June
Bangalore	31st March
Hyderabad	30th June
Kolkata	30th June
Nashik	31st July
Chandigarh	31st July
Chennai	30th June

If you pay the amount before the property tax last day, no interest will be levied on the tax payable.

Check your Property Tax Grievance Status Online

The official website of Municipalities of every state or area offers taxpayers to check property tax grievances or raise a ticket. Lodge property tax payment complaints as well through the same portal.

The steps are simple to check the complaint status online.

Visit the website of the city Municipal and navigate to “Grievances”.
Enter Grievance Id and click on “search” to check the status.
To raise a complaint, fill up the application duly.
Enter applicant’s name, assessment year, reasons for filling, grievance remark, etc. and submit.
Follow the instructions to complete the process.

These are the basic information that every property owner should know to ensure timely property tax online payment. Be a responsible citizen and pay the tax on time.

For any further queries, contact the regional tax collecting office and clear any doubts.

Know the office timings as well to avoid waiting for long in a queue!

FAQs about Property Tax in India

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How do I know the property tax in my locality?

You can find out the applicable tax on your possessed assets through the official Municipality website. Usually, it is mentioned in percentage. All you have to do is multiple the tax rates with the assessed value of your property.

What is the age to claim property tax exemptions?

In India, super senior citizens who are aged above 80 years are exempted from paying property tax.

Besides, other taxpayers can also claim tax exemptions depending on the property they possess, income, history of social work, etc. For instance, a property in a famine zone attracts lesser taxes and so on.

Who is responsible for paying property tax on a rented outhouse?

The owner of the concerned property is liable to pay property tax in India. The tenants have nothing to do with the tax payment as per Income Tax Act, 1961.

What happens if I don’t pay property tax?

Failing to pay property tax attracts a penalty in the form of a penal interest charge on the due amount. However, the penalty charge varies from state to state.

Even after the notice period, if you default on property tax payment, you may have to suffer imprisonment, or the Government can recover the amount through the legal procedure, in extreme cases.

Do all Municipal Corporations accept property tax online payment?

Gradually, Municipalities are adapting to digitalisation in India. While several of them already accept online payment, some are yet to start. Contact your respective Municipality office to know whether they accept property tax online.