What is Property Tax?
Property Tax or House Tax is the tax levied by the municipal authorities on the landowners including residential homes, office premises office buildings, and any premise which is rented to any third party. The calculation of property tax is based on the value of the property. The rate of house tax differs from one Municipality Corporation to the other.
Taxes levied are generally imposed by a municipality, panchayat, municipal corporation or local governments on different types of properties i.e. Land, Improvements made to the Land, Personal Property, Intangible Property. The prime reason for collecting House tax is to maintain and upkeep the local civic amenities such as roads, sewage, drainage, lighting, parks, recreational hubs, and other infrastructure facilities. The key point to note is that property tax is not levied on vacant lands or plots of land with no adjoining building.
How to Calculate House Tax?
In India, House Tax is calculated on the basis of location primarily, but it varies from state to state tax slabs. Different municipal corporations have a different ways to calculate house tax. Below mentioned are the three methods of calculating house tax in India:
1. Capital Value System
2. Rateable Value System
3. Unit Area Value System
Capital Value System (CVS)
This is one of the most common tax systems adopted in India. Under this taxation method, tax is levied as a percentage of the market value of the property. Also, the market value of the property is determined by the government and is calculated on the basis of the locality of the property. In India, Mumbai has set an example for adopting this kind of tax calculation method. The market value of the property is revised and published every year by the state government.
Rateable Value System (RVS)
As per the RVS method of calculating house ta, the tax is calculated on the basis of the rental value of the property. The rent value of the property is determined by the municipal authority which is based on the location, size and condition of the property. However, this tax is not the actual rental collected by the authority. In India, states such as Hyderabad and Chennai have adopted this form of house tax calculation methods going forward.
Unit Area Value System (UAS)
The Unit Area Value System or UAS is the new method of calculating house tax under which tax is levied per-unit price of the built-up area of the property. The value is fixed per square foot per month based upon the location, size and land price of the property and is then multiplied by the built-up area. In India, states such as Hyderabad, Kolkata, Patna, Delhi and many more have adopted the UAS method of calculating the property tax.
How to Pay Property Tax?
After knowing the value of house tax, it is important to make payments and that too before the date expires. There are several modes of house tax payments, it all depends on what mode you opt to pay the taxable amount. One can pay the house tax by simply visiting the Municipal Corporation Office and making the payment directly. Some of the banks are associated with municipal corporations i.e. affiliated banks, you can visit the bank and can pay the amount. For this, you require a Property Tax Number or Khatha Number to identify your property and pay tax for the same. A Property ID or Property Tax Number is a 15-digit number used to extract details of the property and house tax.
However, with the digital platforms coming online, many of the taxpayers have the option to pay the tax online on the respective municipal corporation websites. This is one of the easiest ways to pay the house tax. House Taxes are paid on an annual basis and if you fail to pay the property tax, a late fee of up to 2% per month can be imposed by the authority in the form of interest to the landowners.
