Property tax is an annual tax that all property owners have to pay. This has to be paid to the local municipal body. A major source of revenue, this money is used for the benefit of the area. To help property owners pay the property tax on time, most states in India support online payment of property tax. This can also be paid offline.
Property taxes are not limited to today’s times and have been popular throughout history. The Pharaohs, Greeks and Romans used to collect property tax based on the property for the smooth functioning of the kingdom.
Can you default on property tax?
No, it is a serious offence to default on property tax. Strict action will be taken against defaulters of property tax. To start with the local body will penalise heavily (around 2% of the property tax per month for the number of months delayed). If this penalty amount is also not paid, notice with fine will be sent to the property owner. In case of no step towards payment taken by the property owner, the municipal body has the right to attach the property and release it once the property tax has been paid. In case, if the owner doesn’t still pay the property tax, the municipal body after sending two rounds of notices have the right to auction the property and recover the property taxes that were due for the property.
What are the types of property for which property tax has to be paid?
Property tax has to be paid for residential, commercial and industrial properties.
What types of property are exempted from paying property tax?
- Buildings and land that belong to local authority and will be used in the interest of public.
- Buildings and land used for religion, charitable and educational purposes.
- Defense personnel
- Land in hilly and tribal area. This however have to pay property tax if this land is used for industrial work or supports tourism.
What are property tax due dates?
Property tax due dates are the dates beyond which you will have to pay a penalty on the mandatory property tax that has to be paid to the municipal corporation. They are set because:
- Steady money: Property tax is a major source of revenue for the government and setting deadlines help in planning of use of the cash flow efficiently.
- Used for various public purposes: Property tax due deadline ensures that there is a steady flow of finances that can be used for public services such as infrastructure, education, medical facilities, recreational amenities etc.
- Rebates: Property tax due dates also help the property owners plan their finances in a way that it is not a burden on them. Most municipal bodies offer a rebate on early payment, timely payment or annual payment of the property tax. There is also the option of making a half yearly payment (twice a year).
Why should property owners comply with property tax due dates?
- Planning your finances: When a person buys a property, he is made well aware that he would have to pay an annual property tax. Property tax dues dates help in allocating this money so that your finances are in place.
- No penalty: If a property owner complies with property tax due date, he doesn’t have to pay any penalty for late payment that will be attached with the property.
- No liens: If property tax due date is honoured, then harsh actions such as liens can be avoided. Liens leads to foreclosure of a property that finally results in its auction.
- Good credit score: Any penalty on your property tax or lien on your property will be reported to the credit bureau that may hamper your credit score.
How to avoid property tax penalties?
- Know the local tax calendar: Understand the working of the local municipal body where your property is located as each municipal body in India offer different deadline for paying property tax.
- Check property tax receipt: Always check the receipts which will include important details like rebates, discounts and any adjustment with previous property tax payments.
- Set reminder for the date to pay property tax: Once you know the due date, set a reminder.
- Auto payment: Opt for auto payment where you will give instructions to the bank to pay property tax before the due date. When you give the auto debit instruction, ensure that there is money in the bank account through which you will be making the payment.
- Escrow account: In case the property is mortgaged, the money lender may offer an escrow account where a part of the monthly payment is held towards property tax payment. In this way, it is ensured that the fund are available and the property tax payments are made before the due date.
What are the factors on which property tax is based on?
- Title deed of the property
- Permission for the building to be developed
- District
- Locality name
- ULB
- Street name
- Zone
- Total plot area
- Number of floors
- Building usage
- Type of building
- Plinth area
- Type of occupant
- Age of building
- Annual rental value (ARV)
How is the property tax calculated?
Annual rental value (ARV) = (Area x zone rate x factor indicator x building usage rate) x 12
How to pay property tax online?
- Visit the municipal corporation’s website if it supports online property tax payment.
- Click on quick payment under online services and click on property tax payment.
- Enter the property tax bill details and search.
- You will see all details regarding your property and the tax that has to be paid.
- Click on online payment and proceed.
How to pay property tax offline?
- Visit the ward office of the city Municipal Corporation.
- Fill out the property tax payment form and attach the supporting documents.
- Pay the property tax and collect the receipt.
Housing.com POV
Property tax is an important source of revenue which the municipal body budgets while doing its financial planning. Any default in this will affect the working of the municipal body and hence strict actions such as attachment and auction of property will be carried out. Its recommended that one understands the due date of property tax clearly and adheres to it.
FAQs
Is a tenant expected to pay property tax in India?
No. Property tax has to be paid by the owner of the property.
What are the different ways to pay property tax in India?
Property tax cab be paid online by going on the municipal body’s portal or offline by going to the ward office of the municipal corporation.
What is the general penalty for late payment of the property Tax?
Generally municipal bodies collect 2% of the total property tax amount as penalty.
| Got any questions or point of view on our article? We would love to hear from you. Write to our Editor-in-Chief Jhumur Ghosh at jhumur.ghosh1@housing.com |