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All that You Need to Know About Property Taxes in India

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In India, ownership of both residential and commercial property is taxable. Such tax is also applicable to a land or a constructed property lying vacant. A property owner thus pays an annual tax to the concerned authority for such ownership. These authorities can include a local municipal corporation or state government based in the locality’s jurisdiction.

Property tax is also levied on real estates that include improvement made to lands like constructions or any land that is attached to a building. Owners can make property tax online payment or visit the office of their respective authority to make payment. Here’s a detailed look at things you must know about these taxes as an Indian property owner.

The online payment process of property tax

In this era of digitisation, governments also encourage individuals to use digital platforms to enable essential revenue-generating payments like property tax.

Earlier, property tax payment involved a lengthy process with several complicated procedures. However, with online tax payment, individuals can relieve themselves of all such hassles. Thanks to the increasing digital availability, most local tax authorities, like municipal corporations, offer the facility of property tax online payment.

With the following step-by-step guide of paying online tax, owners can save their valuable time and efforts.

  • Step 1

Log in to the official website of the respective authority, i.e., a municipal corporation or a concerned local body.

  • Step 2

Next, select the ‘Property Tax’ option that would direct you to make property tax online payment.

  • Step 3

Now, select the correct form to pay the tax, depending on the category of your property. The use of these forms is primarily to understand whether any details of the property have changed or not over the year. Like, Form 4 is for unchanged details, and Form 5 applies if any information about the property changes as against the previous records.

  • Step 4

Next, select the correct assessment year that would identify the timeline for which tax is to be estimated and paid. Most corporations also offer an option on their website to clear any property tax dues from previous years.

  • Step 5

Proceed to enter the identification number, personal ownership details, zone, locality, and the type of property.

  • Step 6

Once all these required details are submitted, choose from the various methods like debit card, credit card, net banking, etc. to make payment.

After a successful property tax online payment, you will receive a digital receipt of such payment. It is advised to print such a receipt and keep it safe for future reference. A property tax receipt can serve as an essential document when availing advanced facilities like loans against property.

Calculation of property tax

Depending on the state and locality, property tax can vary across the country. Various corporations apply different calculation methods for property tax assessment as well. However, the elemental overview is the same for all these calculations.

Its assessment depends on the following factors –

  • Area
  • Age
  • Status of occupancy – Whether the property is self-occupied or the owner rents it out.
  • Property type – Whether it is land or commercial or residential property.
  • The amenities available around the property like parking space, retail store, shopping mall, rainwater harvesting, medical facilities, etc.
  • Construction type – Whether it is a single floor or multi-storied property.
  • Floor space
  • Carpet area

Once the corporations determine these parameters, they calculate tax by using different formulas. For example, to calculate property tax Delhi, the MCD or Municipal Corporation of Delhi uses the following formula –

Property tax = Per square meter value of unit area X Use factor X Unit area of property X Age factor X Occupancy factor X Structure factor X Rate of property tax.

Thus, the amount of property tax in Delhi would vary if any of these factors changes. Plus, late tax payments can also attract charges. Based on the state, these fees can range between 5 and 20%.

With timely property tax payments, individuals can also avail tax benefits on advances like a loan against property. So, those planning to purchase a house property can look for these funding options as a means to save on such purchase. 

Moreover, the tax receipts can also serve as an essential document when availing such advances.

Some lenders also help simplify and quicken the application process with their pre-approved offers. These offers are available for several financial products, including loans against property and home loans. Applicants look at their pre-approved offer by providing essential contact details like their name and mobile number.

When availing funding, borrowers need to understand all the charges on loan against property or any such advance to keep repayments affordable. 

As for property tax, their payment is a statutory requirement, fulfilment of which projects you as a responsible citizen. It is equally vital for a property owner to know about the penalty fees on late tax payment to avoid additional expenses.

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