The article is written by Tejaswini Kaushal, a student at Dr. Ram Manohar Lohiya National Law University, Lucknow. This article seeks to explain the meaning, importance, applicability, and calculation of property tax in India, as well as provide a step-by-step process of how one can pay property tax online.

This article has been published by Sneha Mahawar.

Introduction 

The majority of our government’s funding comes from taxes. The same is true of the local municipal body’s collection of property taxes, which is ultimately applied to the construction of neighbourhood amenities. Municipal corporations or local governing bodies impose a charge known as a property tax on any real estate under their jurisdiction. Every property owner in India is required to pay a property tax to support the government’s preservation and improvement of public services. All tangible property, including residential properties, office structures, and property rented to third parties by any property owner is subject to taxation for the latter party. 

Regardless to say, owning real estate comes with a continual monetary obligation to the government. Once the title of a property is linked to your name, you must keep on paying a fee for its ownership. According to the state rules, the owner must pay a biannual or yearly property tax on a variety of real estate items, such as land, a plot, or any structures, stores, residences, or other improvements constructed on these pieces of land. In addition to paying property tax for flats, villas, and bungalows, owners also have to pay a yearly tax on their plot and land parcel holdings, which falls within the broad category of property. Every property owner must pay a property tax. However, it is their choice whether to do so annually or twice a year. 

While it’s vital to pay one’s property taxes, the process of filling out extensive documents and waiting in line might be intimidating. Over the years, a simpler online method of paying for property has developed, greatly simplifying this process. Online property tax payments make it simpler for taxpayers to pay their yearly obligations on time. This article aims at elucidating the same.

What is property tax

A property tax, sometimes referred to as a land tax, is the annual payment that a landowner or property owner pays to the local or municipal government in their region. The guidelines for its imposition are laid down in the Income Tax Act, 1961. Furthermore, the term ‘property’ refers to any tangible real estate that is in a person’s ownership, such as homes, offices, and spaces that are rented to other people. With records of farmers and cultivators paying tax on their land reaching back to the Middle Ages, the idea of property tax has been present for ages and is understood worldwide.

Municipal corporations and panchayats, for example, impose a fee on all physical property within their jurisdictions. The amount must be paid yearly or semi-annually by the property owners. Any property that a person owns, including residential, commercial, and rental property, is subject to this property tax. The amount of tax due is mostly determined by the property’s valuation, location, and local laws. The government uses this principal source of money to create, maintain, and repair municipal infrastructures, including parks and roads.

Importance of property tax

Property tax revenue is crucial to the government because it allows them to upkeep and offers the public facilities that the country’s citizens require. Consider the essential services that the government depends on our taxes, particularly property taxes, to provide, such as building new roads to improve connectivity and performing road repairs, installing sewer pipes and maintaining sewer systems, setting up sufficient streetlights and safety precautions, and maintaining public spaces like parks, museums, and art galleries, among other things.

Present application of property tax in India 

Definition of ‘property’ 

Only ‘real’ property, such as both undeveloped and developed land, is subject to property tax in India. The municipality in a region assesses various property types in that region to determine the appropriate tax based on market value. It also establishes the worth of its evaluation. Property tax revenue is used to maintain municipal infrastructures, such as roads and schools, and to repair roads, among other things. Property taxes range across cities and municipalities as well as between various parts of a city. In India, the state government or the local municipal organisations impose the property tax. It is placed on the property’s owner and is also referred to as ‘house tax’ or ‘land tax’.  It was no longer enforced on the property custodian in accordance with the 44th Amendment to the Constitution, which was adopted in 1978.

Types of property tax in India

The government classifies properties to make the process of estimating taxes based on particular criteria more efficient. India’s real estate is broken down into 4 categories, viz:

1. Land in its basic state, undeveloped and unenclosed.
2. Personal property including movable manufactured assets like automobiles, machines, etc.
3. Constructions and immovable improvements built on pieces of land, such as buildings, warehouses, etc., for the land’s improvement and upgradation.
4. Intangible property i.e. the property that doesn’t have a physical form, like patents, copyrights, licences, etc.

Who imposes property tax

Property tax is one of the main sources of income for city municipal organisations. In addition to providing and maintaining utilities like water and electricity supply, sewage systems, electricity, and sanitation, the municipal body uses the money obtained through the collection of land taxes to create and enhance the infrastructure in the region. Municipalities determine the yearly worth of your real estate assets using a variety of techniques before imposing a tax rate based on that value. This tax must be paid to the local municipal authority in your region once or twice during an assessment year. The rate of land tax varies from one location to another and from one city to another due to the varying regulations and assessment techniques used by local organisations.

Who needs to pay property tax

Property tax is a requirement for all property owners. All real estate, including residential and commercial structures, attached land, and land improvements, are subject to property taxes imposed by the government. Additionally, it should be noted that the owner is exempt from paying land taxes as long as the plot is unoccupied.  It is not assessed on undeveloped lots without an adjacent structure. 

However, an empty home is an exception to this rule. Additionally, the yearly tax that you are required to pay from your income each year in accordance with income tax regulations is not the same as land or property tax. Your real estate holdings are subject to taxation on your yearly income under Sections 22 to 27 of the Income Tax Act on income under the head house property.

Tax on vacant land

Many municipal governments in major cities have started to charge land taxes on empty lots and property parcels inside the city borders, even if this was not a frequent practice in the past. This is especially true if the empty land is situated in a prime area. Municipalities impose a fee on unoccupied lots because they believe that treating the land in this way wastes costly materials.

Income from house property

The phrase “income from house property” applies in the following circumstances:

• The rent you earn from renting out your home or homes will be included in your income.
• If you own more than one home, the Net Annual Value of all of your homes, aside from the one you live in, will be taken into account when calculating your income.

If you just own one home and live in it, the revenue from real estate will be counted as ‘nil’. After deductions made under Section 24 of the Income Tax Act, 1961, any income obtained from rent and the yearly value of additional homes will be taxed.

Calculation of income from house property

Here are a few considerations for streamlining the process while examining house property income:

1. Your home’s Net Annual Value (NAV) is the only factor used to determine your taxes. The net yearly worth of a property is determined by deducting its municipal taxes from its Gross Annual Value (GAV). Say, for instance, you collect Rs. 2,40,000 lakh in annual rent on a house you rent out and pay Rs 80,000 in municipal taxes. The NAV of your property is Rs 1,60,000, and you must only pay tax on this amount.
2. You must only take into account the rent paid, not the entire amount received, for any period that your home is vacant owing to a lack of tenants. A residence that has been rented for Rs 34,000 per month for the first four months of the fiscal year would have a gross worth of Rs 2,72,000 (Rs 34,000*8). The tax due on this income will be determined once the normal deduction of 30% and the municipal tax amount have been subtracted.
3. You may deduct this loss from income from other sources within the same fiscal year, such as salary or rent received from another property, if your house is unoccupied but you pay municipal taxes. If the loss cannot be made up in the current year, it may be carried forward for a maximum of eight years.

Calculation of property tax

For the purpose of collecting land taxes, local governments assign a yearly value to properties in their jurisdiction based on a variety of factors, including size, location, and amenities. However, they arrive at this calculation using different methods.

Methods of calculation of property tax

To determine this yearly payment requirement, the numerous local governments in India use one of three main ways to calculate the land value:

Annual rental value system

This approach is used by municipal entities in Chennai and Hyderabad to determine yearly property values. Whether or not a property is actually rented out, it has the potential to provide a certain amount of monthly rental. A fixed proportion of your income must be paid as land tax, which is determined by the property’s yearly rental value.

Hence, under this method, you must first calculate the annual property value using the following formulae:

Rental Value (Monthly) = (Basic Rate per Square Foot) * (Plinth Area)

Annual Rent Value = (Monthly Rent Value) * (12% – 10%)

Unit area value system

This technique is used by the municipalities of Ahmedabad, Bengaluru, Delhi, Kolkata, Hyderabad, and Patna to compute land taxes. With this approach, a price per unit is associated with the unit area value, carpet area value, use factor, age factor, occupancy factor, and structure factor. All contribute to the annual value. The location and intended use of the property are important factors in determining value, and a tax rate is imposed based on the anticipated profits on the property. The formula for the same is: 

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

In addition, several considerations are taken into account when calculating your property tax amount. Some of these are as follows:

• The collection agency
• Property class
• Various areas’ systems of government operate differently.
• Location of the property, whether it is rented out or occupied by the owner, etc.

Capital value-based system

According to the capital value of a property, the Brihanmumbai Municipal Corporation (BMC) aimed to establish regulations for the imposition of property taxes. However, the ruling was revoked by the Bombay High Court in April 2019. The market value of the property, which is updated annually by the local authority, is utilised in this approach to calculate the land tax.

The formula used to calculate property taxes and determine the amount owed is listed below:

Property tax = (Base value + built-up area + age factor + floor factor + property type + usage category) 

Process of calculating the property tax

The following is the property tax calculation formula:

Property tax is calculated as follows: base value + built-up area + age factor + building type + use category + floor factor.

In India, the location of a property determines the applicable property tax, which varies from state to state. Although many municipal corporations employ a variety of tax computation techniques, the fundamental framework is the same and is described below.

Property tax calculations must take into account the following factors:

• The location,
• The type of property (residential, commercial, or land),
• The occupancy status (whether it is self-occupied or rented out),
• The amenities offered (car park, rainwater harvesting, store, etc.),
• The year of construction, 
• The type of construction (multi-story/ single floor/ pukka or kutcha structure, etc.), 
• The property’s carpeted square area and floor space index, and
• The state or local corporation.

Different municipal corporations use different calculation techniques.  It is significant to note that because taxes differ from state to state, the amount of tax due in the nation depends on where the property is located. Municipal corporations calculate the tax using a variety of methods. However, the fundamental structure of these computations remains the same.

Once these criteria are established, the municipal agency can compute taxes using any method it deems suitable. When you provide the necessary information precisely, the tax amount may be determined immediately. A property’s tax may be simply calculated online via the official website of the relevant municipal corporation, depending on the aforementioned parameters.

Guidelines for calculation of income from house property

You can calculate your revenue from real estate by being aware of the following provisions.

1. The term “Net Annual Value of the House” refers to the gap between the gross annual value of the property and the municipal taxes you paid on it.
2. Only the rent you received during the months when you had renters will be included against your yearly revenue from the rental property if you were unable to locate tenants for a portion of the fiscal year. This income will be subject to taxation following the deduction of the 30% standard deduction as per Section 24(b) of the Income Tax 1961, and the municipal tax.
3. Suppose the property with regard to which you are paying municipal taxes is vacant. In that case, you can make up for your deficits by using resources like the rent from another rental property or your salary for the same fiscal year. A loss from one financial year may be carried over for a total of eight further years (Section 70 to Section 80 of the Income Tax Act, 1961).

Interest on property tax

Property tax payments that are made late are subject to extra fees as a fine, which varies from state to state. Property tax late payments are subject to a fee, which is often a specific percentage of the amount owed. Depending on their own regulations, certain states may choose to waive this interest, while others may choose to impose rates ranging from 5% to 20%.

Delhi imposes a penalty rate of 15 to 20 % on late payment of property tax. In recent times, as an effort to encourage more individuals to pay their dues, several states have removed fines on property taxes, like Bengaluru.

Capital gains tax on house property

Any profit realised from the sale of a capital asset is referred to as a capital gain. The category of revenue includes the profit that is made. As a result, the income that is received must be taxed. Long-term or short-term capital gains taxes are the types of taxes that are paid. Capital gains tax, if improperly managed, can result in severe financial loss.

This is, thus, due from the proceeds of the sale of your home. If you use this money to buy another residential property within two years after the sale, you can avoid paying tax on the profit. Additionally, you can use this profit to build a new home within 3 years of sale to avail exemption. Alternatively, the amount of capital gains tax on real estate might be decreased by using the money from the sale of a property to construct a residential house.

Methods of paying property tax

The majority of Indian municipal organisations now accept land tax payments online. Therefore, you may pay your land tax online through the municipal body’s website or by downloading the app on your smartphone. Using the specific ID and PIN assigned to your property, you may pay your land tax online. Net banking, debit/credit cards, and mobile wallet credentials are other payment methods. As an alternative, you can pay property tax in person at the municipal office, where you can fill out the necessary forms, send them, and pay by cheque.

Offline method

The original method of paying property tax is visiting the municipal corporation of your place yourself to pay the tax amount. In rare circumstances, you can also pay your property taxes at specified banks connected to the municipal corporation. You must determine the amount owed and complete the required documents in order to pay property tax in an old-fashioned manner. Once the documents have been completed, you must pay the tax at the bank chosen by the municipal corporation or at particular tax-collection locations set up by the government. Demand drafts, credit cards, or cash can all be used to make the payment. Such payments can be made in person at the nearby municipal offices. Within the office space, you may search for the precise counter that accepts property taxes. Don’t forget to obtain and retain the property tax receipt for your records.

Online method

Online property tax payments are becoming more and more common. Complete the purchase by entering the necessary information. However, the process each state uses to collect taxes varies just a little. Therefore, before moving on, make sure your concerned municipality permits online tax payments. It is best to be aware of how to pay property tax online since it is simpler and quicker.

Persons exempted from paying property tax

Despite the fact that regulations vary from state to state and municipal to city, certain property owners qualify for refunds on their total property tax obligations. The following conditions make a person eligible for an exemption from property tax:

1. Land owned by governments or religious organisations.
2. Any structure or land that has been used for a certain activity, such as worship, burial, history, etc.
3. Any real estate utilised for charitable causes.
4. Except for property that is utilised as a residence, any structure or property used for agricultural purposes is exempt.
5. Property, where the company has vested ownership rights, is subject to primary taxation.
6. Property owned and occupied by a widow of a military soldier who received a medal for valour/gallantry award.
7. In all states, exemption from payment of property tax is given to:
   1. Elderly people (super senior citizens,  who are 80 years of age or more),
   2. Individuals with disabilities,
   3. Former members of the military, whether they were in the army, navy, or another branch,
   4. Families of the Indian Army, BSF, police, CRPF, and fire brigade martyrs,
   5. Educational establishments, and 
   6. Agricultural properties,

It should be noted that local governments in India frequently fall short of generating the cash for which there is potential due to the numerous exemptions provided to various segments. For this specific reason, a number of experts have recommended that the local governments take back some of the waivers in order to increase their revenue. There are very few odds of existing exemptions being revoked, though, because doing so would be extremely controversial.

Property tax deductions against income

Section 24 of the Income Tax Act, 1961

“Deductions from income from house property” is the title of Section 24. It provides for deductions against income earned by an individual from his house property through rent or the annual value addition of the house.

Deductions under Section 24 of the Income Tax Act, 1961

According to Section 24 of the Income Tax Act, there are two different categories of deductions:

1. Standard deduction: A flat 30% of the net yearly value is excluded from taxation under this deduction, which is available to all taxpayers without any restrictions or classifications. Yet, if you live in the sole residence you own, this rule does not apply to you.
2. Loan interest: If you borrowed money to buy, build, or renovate a home, the interest you paid on the principal amount of the loan is not subject to taxation. Subclauses in this group include:

1. You may be eligible for exemptions of up to Rs. 2,00,000 if the loan was obtained for a self-occupied home.
2. You may still be able to claim the interest if you took out a loan to pay for the acquisition or construction (not renovation) of a property before actually doing so. In five equal instalments at the beginning of the year, the house is purchased or the building is finished, you can claim a deduction for the interest paid before the purchase or construction is finished.
3. To qualify for this deduction, you must compute the interest payment due to the bank or other financial institution from whom you borrowed the money, in addition to the principal payments.
4. You are still eligible for the full yearly interest amount, regardless of whether you have actually paid the lender the required sum.
5. You cannot claim a tax exemption if the loan is used to renovate or rebuild a home until the work is done.

Exemptions under Section 24 of the Income Tax Act, 1961

1. You are eligible to receive a full exemption from paying interest on a property even if you do not live there, without any upper limit to the amount.
2. You may only claim a tax exemption on interest payments up to Rs. 2,00,000 if you are not the owner of the home and reside elsewhere due to your professional commitments, or if you rent a home in the city where you work.
3. For you to be eligible to deduct the maximum amount of loan interest, you must purchase the property or finish construction on it within three years of taking out the loan. You can only claim Rs. 30,000 instead of Rs. 2,00,000 if the building or acquisition is not finished within three years. 
4. There is no deduction for any commission or brokerage fees for obtaining a tenant.
5. For the loan you are taking, you must also be in possession of an interest certificate.

Tax deductions under Section 80C of the Income Tax Act, 1961

Section 80C of the Income Tax Act, 1961 allows people to claim deductions on their income tax when they buy a new home. 

• Stamp duty and registration fees, which may amount up to around 10% of the entire cost of a property, may be deducted under this condition. 
• People may also deduct any additional costs incurred in the process of transferring property.
• The maximum amount of deductions that may be claimed under this provision is Rs 1,50,000.
• Owners should be aware that this only applies to brand-new residential properties.

Rebates on property tax

Municipalities all around the nation provide taxpayers with different refunds based on a range of variables.

1. Rates vary by owner age, with older citizens paying less.
2. Depending on how the property is used, rates are cheaper for those belonging to charitable trusts or designed for public use.
3. Depending on the region, rates are cheaper for homes in high-risk zones for flooding.
4. Depending on the property’s age: In certain cities, older homes are subject to cheaper property taxes.
5. Depending on the owner’s income. Additionally, those from low-income and economically disadvantaged groups pay lower land tax rates.
6. Depending on how full the property is, in certain cities the longer you stay there, the cheaper the rates get.

Property tax online payment guide

Guidelines for online payment of property tax

• By entering your Property Tax Number, Revenue Survey Number, or Khatha Number, you may pay your property taxes online through the state or municipal website. If paying your property taxes online is something you prefer, you should be aware of the following rules.
• You will be reimbursed through DD or check upon verification if there is a balance after you have paid your tax in advance and after correcting the dues from the prior year(s), if any.
• The outstanding balance or unpaid balance from any prior year(s) will be included in the property tax for the specific fiscal year.
• You can use the same form, as used for the first instalment, for the second instalment if you choose to pay the property return for the current fiscal year in two instalments.
• A 5% discount is available if you choose to pay the total tax amount in one instalment.
• Only until the challans for each of the prior years have been generated can the arrears for the prior year(s) be paid for.
• While a receipt is immediately provided for payments made in cash or by DD, a receipt for payments made by check will not be generated until the amount on the check has been realised.
• On the tax amount for the defaulted period, an interest charge of 2% per month is automatically computed.
• If the property for which you are paying municipal taxes is vacant, you can make up for your losses by using resources like the rent from another rental property or your salary for the same fiscal year.
• A loss from one financial year may be carried over for a total of eight further years. 

Details required for online payment of property tax

Prior to proceeding with your online property tax payment, have the necessary information on hand. These specifics are related to the location, size, and classification of your property.

You require the following information:

• The property’s annual value,
• Categorization of the property (residential, non-residential, vacant lot, billboard, shop, etc.),
• Classification by zone and location,
• Measurements of the property,
• Constructed area of the property,
• Amount of floors (this will include basements too),
• Developed space on each floor,
• Bills for electricity, and
• Whether the property is covered under the exemptions provided for certain types of properties.

Steps for obtaining tax application number

Knowing the tax application number is essential if you choose to pay your property taxes online. To find the new application number online, follow these instructions:

1. Visit your municipality’s website on property taxes.

2. Go to “GIS-based new PID” and click on the tab providing information on the new PID.
3. After entering the old application number, select “search” to allow it to fetch results.

4. Choose a name and launch “search”
5. The information will show up on the screen. Look for any errors that might have crept up in the details.
6. Click “view your property in map” for additional details. Look up the location on Google Maps.

7. Save or download the details.
8. Adjust as required at these periods. If your name is entered wrongly in property tax, for instance, you can update it online.

Process of online application

Only if your municipal corporation has made the option accessible will you be able to pay property taxes online. You must gather information about your property, including its location, before you may pay your taxes online. Once you have the information, you may visit the site, enter the necessary data, and continue with the process. The following picture shows the interface for the same for the municipal corporation of Bengaluru. 

To do this, you must:

1. Visit the municipal corporation’s website and log in with your personal data.
2. Visit the column where you may submit an online property tax payment.
3. Click the Property Tax Payments tab, then adhere to the guidelines.
4. Enter the necessary assessment codes and area information on that page.
5. Choose the appropriate online application for property taxes and fill in the property type, location, etc.
6. Carefully enter the assessment year. Select prior years in addition to the current ones to pay any debts.
7. Mention the plot number, revenue survey number, and other identifying numbers for the property.
8. Once all the information has been input, the amount of tax that is owed on your property will be displayed, and you may then continue to pay it using your credit card, debit card, or net banking. If you plan to utilise net banking, keep in mind that only net banking offered by approved institutions will be accepted for payment of property taxes.
9. Check the status of the property taxes after a successful payment to make sure all debts have been paid.
10. Download or print the property tax receipt/challan for reference.

The payment status of your application may also be checked through the portal as shown in the following picture. 

List of major municipal corporation websites

1. Ahmedabad Municipal Corporation (AMC)
2. Bruhat Bengaluru Mahanagara Palike (BBMP)
3. Greater Chennai Corporation (GCC)
4. Greater Hyderabad Municipal Corporation (GHMC) 
5. Kolkata Municipal Corporation (KMC)
6. Pune Municipal Corporation (PMC)
7. Navi Mumbai Municipal Corporation (NMMC)
8. Municipal Corporation of Greater Mumbai (MCGM)
9. Municipal Corporation of Delhi (MCD)
10. NOIDA Authority
11. Municipal Corporation of Gurgaon (MCG) 

Process of downloading property tax receipt online

The property tax receipt, also called a property tax challan, can be downloaded as a soft copy as well. One must keep a copy of the receipt after paying the property tax in India. To store it for later use, follow these procedures:

1. Visit the municipal corporation’s website that is relevant to you. You will get the interface for receipt download as shown below. 

2. Use the OTP to get into your citizen account.
3. On the next page, there will be information on paying property taxes.
4. Click on the “actions” tab.
5. Select “download receipt” by clicking “tax paid information.”
6. To finish the download, click “download PDF.”
7. Additionally, it’s crucial to pay your property taxes on time to avoid penalties that may be assessed if you miss the deadline.

How to pay property tax online without a property ID

An individual identifying number assigned to properties by local government agencies in the state is called a home tax property ID number. To obtain information about the property and property tax, use the property tax ID number. A property ID is often a 15-digit number. Paying taxes to the municipality requires a property tax identification number. These taxes fund local economic development in your area. Maintenance is paid for using the proceeds of property taxes. 

The information about your property ID could already be on your prior invoices, tax returns, or the property’s title deed. You can still pay the property tax even if you haven’t gotten your tax identification number yet. You only need to provide the information about your property to continue, which includes the PIN number that is available on the bill that was delivered to you, your name, your house number, or the most recent receipt number, etc. These details can be used to pay your income tax online in a similar fashion as already provided above in case you lack a property ID.

Process of checking property tax grievance status online

There is a provision for submitting grievances to the municipal corporation through their online portal as shown below. 

Taxpayers can check their property tax complaints or file a ticket on the official website of the municipalities in every state or region. Use the same portal to file complaints about unpaid property taxes. To check the status of a complaint online, follow these simple steps:

• Go to the concerned city’s municipal website and select “grievances”.
• Input the grievance Id, then select “search” to find out the status.
• Fill out the form completely if you want to file a complaint.
• Name of applicant, assessment year, justifications for filling out, grievance comment, etc.
• To finish the procedure, adhere to the directions.
• These are the fundamental details that each property owner has to be aware of in order to make prompt online property tax payments. 

To check the status of your grievance, you can do so by filling in your ticket number and obtaining the relevant information as shown below. 

Pay your taxes on time and act like a good citizen. One can also consider contacting the regional tax collecting office to clarify the process, and any updates on the modus operandi, or to clear up any doubts. Confirm the office timings and adhere to them so as to avoid waiting in a long queue.

Penalties for defaulting to pay property tax

For those who aren’t exempted from paying their property tax, there is no way to totally avoid the same. It’s a trend in India where property owners don’t pay taxes for years on end, and sometimes even decades, then pay it all together or try to escape this liability inevitably. You shouldn’t make an effort to evade paying these taxes because penalties and fines are placed by municipal corporations for non-payment. of this. If you pay your property tax after the due date, you may be charged a late payment penalty.

Authorities impose fines on late property tax payments around the nation. Typically, a particular percentage of the total amount owed is used to determine the fine you will be required to pay. States have different interest rates, some have none at all, while others impose fines ranging from 5% to 20%.

You will be required to pay a monthly penalty equal to 1% to 2% of the outstanding balance, depending on the city in which you live. Bangalore levies a 2% penalty, whereas Mumbai’s municipal corporation levies a 1% penalty per month for unpaid property taxes. A protracted delay in payments may potentially compel the government to seize and auction your property in order to recoup damages. If you don’t pay your property taxes even after receiving notice, the government may sue you to get the money back, or, in the worst-case scenario, you might be sentenced to prison.

Conclusion

In India, many of us invest a lot of our energy and efforts in constructing our ideal dream homes, but this presents a unique set of difficulties. But there are obligations that come with property ownership. Some of the many things include learning the specifics of a property and paying property taxes online. Yet, with the growth of the online mechanism of paying property tax through municipal websites, the process has become significantly more efficient and less cumbersome than the traditional method of travelling to the municipal corporation office to ensure tax compliance. Complying with the tax obligations is essential for all Indian citizens eligible to pay, and they must ensure to contribute their share towards the development of the country.

Frequently asked questions (FAQs)

What is the meaning of property tax?

Real estate owners must pay a tax called a property tax, often known as a house tax, to local authorities in order to maintain the ownership title of their property. This property tax, which may be biannual or yearly, is levied on real estate assets such as land or plots as well as any structures, dwellings, or other improvements placed there.

Who is obligated to pay property tax?

Property taxes must be paid by any person or entity that owns tangible property, such as a home or business building. Property owners, not tenants, are responsible for paying property taxes.

How can I verify property ownership in India online?

Find the internet portal that is appropriate for your state in order to verify property data online. You may quickly check land and property records online through the use of this site. There is an internet portal for each of the main states, including Punjab, Maharashtra, Delhi, Gujarat, Rajasthan, Karnataka, Uttar Pradesh, Tamil Nadu, Bihar, and Madhya Pradesh. These states all have online copies of their land and property records.

What is the purpose and significance of property tax?

The majority of the money that government agencies get comes from taxes. The development of places, including the building and upkeep of neighbourhood public amenities, roads, parks, sewer systems, water supply systems, etc., is funded by property taxes. 

How can property taxes be computed?

Land is a state topic, and each city has developed a unique property tax computation method based on its population density and physical location.

Does the federal government set the property tax rate?

No. Your local administration, or urban local authorities like municipal corporations and similar entities, decides how much property tax to charge. 

How to find how much property taxes one is obligated to pay?

You can access the official municipality website to learn the appropriate tax on your possessions. It is often expressed as a percentage. All you have to do is multiply the tax rates by the property’s assessed value.

Do all Municipal Corporations accept online payments for property taxes?

Municipalities in India are gradually adjusting to the digital revolution. Many of them already accept online payments, while some haven’t yet. To find out if your local municipality accepts property tax payments online, contact their office.

How can property taxes be paid online?

It can be done by going to the site of the municipal corporation, entering assessment codes and area details of your property on the page that allows you to pay property tax online, and making the relevant payment. In order for the payment to be mapped to your property, you must have your Property ID number in order to use this service.

What are the repercussions of not paying property taxes?

You will be required to pay a penalty as well as a late charge if you don’t pay your property tax on time. On the other hand, you run the danger of having your home sold in a tax sale if you do not pay any property taxes. If you don’t pay your property taxes even after receiving notice, the government may sue you to get the money back, or you might be sentenced to prison.

What are the provisions to qualify for a property tax exemption?

Property tax exemptions may be requested based on the criteria including age (in the case of a super senior citizen, i.e., those who are 80 years or older), net income, location of the property (famine zone or other such regions), nature and type of property, and history of service to the public.

Does one need to pay property taxes on agricultural land?

No, in India, there are no property taxes due on agricultural land.

Does one need to pay taxes on undeveloped land?

Yes, even if the land is unoccupied, you must pay property tax to the local corporation.

If a property is owned jointly, who will pay the property tax?

In the instance of joint ownership of property, both owners are equally responsible for paying property taxes.

Who is liable for paying the property tax on an outhouse that is rented?

In India, the owner of the relevant property is responsible for paying property tax. According to the Income Tax Act of 1961, the tenants or occupants of the property have no involvement in paying taxes.

Can one’s property’s tax assessment be more than the property’s market value?

No, it can never be so. Either you are ignorant of your property’s market value or your estimation is inaccurate. The best course of action is to clarify with your local government. You can determine why the tax amount is high by looking at the tax bill.

References 

• https://dor.gov.in/sites/default/files/IT%20Act%20%28English%29_0.pdf
• https://services.india.gov.in/service/detail/know-your-property-tax-dues-payments 
• https://www.thehindu.com/real-estate/your-ultimate-guide-to-property-taxes/article19962403.ece 
• https://www.protean-tinpan.com/guided/guide-e-tax-payment.html 
• https://ndmc.gov.in/departments/property_tax.aspx 
• https://www.thehindu.com/news/cities/bangalore/bbmp-proposes-to-let-go-of-penalty-and-interest-on-tax-arrears/article61426703.ece  
• https://incometaxindia.gov.in/Pages/default.aspx  
• https://www.incometaxindia.gov.in/Pages/tools/deduction-under-section-80c.aspx  

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