In India the land tax also called the property tax is paid annually or semiannually to the Indian government. Note that even if you have availed the property through a loan i.e., HDFC home loan or LIC home loan, you must pay the tax incurred on the bought land or property. This tax gets paid for the ownership of property’s title. There are distinct land taxes depending on distinct property’s parameters with specific rules set by the states. It must be paid to the municipal body of the region where the land is located. Land tax is even applicable for the improvement made on the buildings where the land is located, whether a shop or residential property.
What’s the importance of property tax?
Property tax is the main revenue source for the civic or municipal bodies to ameliorate the infrastructure of the city or town. The revenue from the land tax is used for distinct purposes and reasons ranging between maintaining cleanliness to street lighting to upkeeping the sewage body, water supply and electricity.
Computation of the property tax
Property tax is computed depending on the annual property value. Distinct methods are used to compute the figure. The conditions and the valuation measure may vary for every village, civic body, city, and town. The tax depends on parameters like size and location of the land and amenities attached with it. There are fundamentally three kinds of valuation methods used in India to arrive at the figure for annual property value, which will determine the tax of the property. Such methods are as follows –
Unit area value – As suggested by the name, this method makes use of the per unit price to decide the property tax. The per unit cost depends on the property’s carpet area. The property’s usage and its location play a crucial role in deciding the returns that may be expected from the land and depending on this, the taxes get computed. This method basically is utilised to decide the property tax by the municipal bodies in cities of Patna, Hyderabad, Delhi, Bengaluru, and Ahmedabad.
Also Check: LIC Home Loan
Capital value – The property’s capital value is utilised in this system, which was planned out for the use by the BMC or Brihanmumbai Municipal Corporation. The civic body would timely revise the market value of the property on an annual basis under the system. However, this system got canceled in April 2019 by the Bombay High Court.
Annual rental value – As per this system, property’s rental value regardless of whether it’s rented out or not, is utilised to compute the land tax. Percentage of the earnings of the owner from the rental, whether it is rented or not must be paid as land tax. Municipalities of Chennai and Hyderabad use this method.
Who must pay the land tax?
Property tax must be paid by anyone owning a home that is vacant or occupied. Property tax must not be mistaken for annual tax. This is paid as per the IT laws on real estate assets. The tax comes under Income from Property head as per the IT Act, 1961.
Rebate on the property tax –
The Indian government provides several discounts on property tax depending on distinct parameters. This can assist you to save substantially if you fall in any of the categories that qualify for such rebates. Read on to know them –
- Owner’s age – Property or land tax is lower for the senior citizen owners.
- Property’s age – In few municipal regions, older properties levy lower taxes as compared to the newer ones.
- Area’s nature – The land or property taxes are lower in regions prone to floods.
- Income of the owner – Owners belonging to the LIG (low-income group) or EWS (economically weaker sections) are basically eligible for the lower land taxes.
- Property’s usage – If the property or land owned by any charitable trust is for public use, then the property taxes are considerably lower.
How can you make the payment of the property tax?
There are majorly two ways to make payment of your property or land tax today. You can select to pay the tax through the online or offline mode.
Offline mode – Approach your municipal office, get the form for property’s tax, fill the same, and submit the form in the office with the required tax payment cheque.
Online mode – You can make payment of the land or property taxes through the site of the area’s municipal body. A few municipal bodies even have a mobile application. This you can download and then make the payment of the taxes easily. To make the payments, you may select from a variety of payment modes like mobile wallets, internet banking or your credit card or debit card. A unique property ID or PIN is allotted too.
You can pay for the property tax at the municipal corporation office of the region or at designated banks in affiliation with the municipal corporation. You might require offering the property tax detail or the khata number to figure out your property. Nowadays, most municipal taxes can be paid through the online mode on corresponding municipal authority sites, making it way more convenient for the property holders. Specific municipal authorities might provide a few exemptions on payment of property tax depending on parameters like age, location, property type, owner’s net income, etc. It is important for you to authenticate carefully with the local administration for such details and evaluate your tax liability well.
Property tax required being paid annually. If you fail to make the payment of the property tax, then the late payment charge may attract a fine in form of interest constituent on amount due, which may be anywhere up to 2 percent every month. Also, it is crucial for you to remember that the onus of making the payment of the property tax is on the owner of the property and not upon the property’s occupant.