The Property Tax is also an indirect form of tax like stamp duty and GST. It is also governed by the Income Tax Act, 1961. Any individual owning a land or property has to pay property tax in India. The Government of India is levying property tax either through Municipal corporation or local government. Read on to know more about property tax and related information.
The property in India is divided into four categories:
One can pay property tax both online and offline. If you are choosing offline mode, an individual is required to visit municipal office and make submission of the amount at a specific counter accepting property tax. After the completion of procedure, payment receipt issued to the tax payer for future reference.
Log in to the official portal of Municipal Corporations
Property tax = base value × built-up area × Age factor × type of building × category of use × floor factor.
It is based on the property location, with taxes varying from state to state. Every civic operation is using different methods to calculate tax, get here the overview.
The property assessment is based on the following factors:
Once these parameters are determined the civic agency can use a formula it deems fit to calculate tax. Different agencies use different formulas. The tax on a property will vary according to the factors mentioned above and can be easily computed online, through the official website of the municipal corporation concerned.
Capital Value system - The property tax is calculated as a percentage of the present market value of the property depending on the locality, under CVS. This is the system of property tax evaluation followed in Mumbai.
Unit Area Value System (UAS) : In this system, the municipal authorities in India find outs the property value depending upon location, land price, and usage. Then multiplies this amount with built-up area to get the actual tax value. This system is followed in cities such as Delhi, Kolkata, Hyderabad, Bengaluru and Pune.
Annual Rental Value System or Ratable Value System (RVS) : Under Annual Rental Value system, first the property’s rental value is calculated considering the property’s proximity to landmark and other amenities, and its condition, size, and location. Finally, the tax payable is calculated on the rental value of the property. This system is followed in Chennai and some parts of Hyderabad.
On making delay in paying property tax will attract a fine, generally equivalent to percentage of amount due. The interest will vary from state to state. It can fall between 5% to 20% based on individual policies.
For example : Some states waived off property tax while Bangalore decided to slash interest for late payments from 20% to 10%, in a bid to get more people to pay their dues.
Section 24 is titled as "Deductions from income from house property". 'Income from house property' is applicable in the following cases: If you are renting out your house(s), then the rent received will be considered as part of your income
If you have more than 1 house, then the Net Annual Value of the houses, except the house you are living in, will be considered as your income.
If you own only 1 house and you are living in it, the income from house property will be considered as NIL. Any income derived from rent and annual value of additional houses, will be subject to tax after deductions made under Section 24.
Standard Deduction- Under this, an individual get exemption from making tax payment up to 30% of annual value and this system is not applicable for those individuals occupying the only house they own.
Section 80 C of Income Tax Act, 1961 - All homeowners possessing one house property from the date of loan sanction can avail tax exemption. In case your home loan is less than 35 Lakh, and the property value is less than 50 Lakh.
The tax will be applicable on the profit earned from the sale of the property. To save yourself from paying additional tax, you can purchase house within two years from the selling date.0
The proceeds from a property sale can also be used to build a dwelling, reducing the amount of capital gains tax on property.