Property tax, also referred to as house tax, is a tax that is imposed on real estate property owners by municipal authorities like the panchayat and municipal corporations. It is levied by the State Government, unlike Income Tax, which is charged by the Central Government.
Property tax which is levied can be paid online also. Paying the property tax before the due date can allow property owners to enjoy tax rebates. This tax is used for the maintenance and upkeep of the area, such as roads, sewage systems and other facilities. This tax is levied on all real estate properties, which include residential and commercial buildings, attached land, etc., but is not applied on vacant plots of land with no adjoining building.
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How many times a year should I pay taxes for my house?
Property tax is levied on ‘real property’. The term ‘real property’ includes any improvements that are made like buildings, factories, go-down, residential houses and shops, but does not include vacant plots of land with no attached building on it.
Property tax is calculated from April to March and property owners are eligible to pay the tax by April 30th of the following fiscal year. If the owner opts for payment in two installments, the first installment needs to be made by May 30th and the second one by November 30th to avoid any additional interest rates on the tax. Property owners are entitled to a tax rebate of 5% if the entire tax is paid before May 30th of every fiscal year.
This tax is to be paid once a year and the amount of tax to be paid is calculated by the municipality of a particular location. Late payment of the tax can lead to a fine with interest which is charged on the amount due as tax.
Factors involved in the payment of tax:
- Location and size of the property
- Age and gender of the property owner
Will I get property taxes back when you sell your house?
Property tax is levied on the ‘real property’ and includes real estate projects for residential and commercial purposes, buildings that are attached to lands such as shops, factories and go-downs.
The property tax is paid by the owner of the property annually. Once the property is sold, the previous owner of the property will not get the tax that he has paid over the property. This is because the tax is paid on the ownership of the property, and it is the duty of each seller to ensure that all the taxes on the property are paid up and updated before selling the property to a potential owner.
This is done so that the new owner of the property does not have to pay any taxes that the property had incurred before he got ownership of the property.
Can my tenant pay the property tax? Is it legal?
In India, the onus of paying property tax usually lies with the house owner, i.e., the owner of the property has to pay taxes. A tenant of the property cannot pay the tax. If a tenant is forced by the house owner to pay the property tax amount, the house owner can be sued in civil court. However, prior to obtaining the residential property, if the landlord and the tenant discuss the payment of the property tax, and the tenant has no objection to the same, the tenant can pay the property tax. It should be specifically mentioned as a clause in the rental agreement.
Is there any way I can get an exemption from property tax?
The following categories are a few instances in which a person may be able to claim exemption from property tax:
- Property tax exemption based on your age (if you are a super senior citizen, for example),
- Property tax exemption based on net income of the individual
- Property tax exemption based on type of property (if the property is a vacant plot of land, property tax does not have to be paid)
- Property tax exemption based on the location of the property (if it is located in a famine zone or such affected regions),
- Property tax exemption based on the history of public service or value of the taxable property.
What are the methods of calculating property tax?
The local municipal authority is responsible for levying property tax on the properties that are present under its jurisdiction. This tax is levied for the maintenance of the basic facilities such as maintenance of the roads, sewage systems and other facilities which are provided in the city Municipal authorities use various methods for the purpose of calculating the tax.
Annual rent value –
It is the tax that is calculated on the rental value which is derived from the property within a year. It need not be the actual rent amount; it is a valuation that is determined by the municipal authority. The municipal authority calculates this based on the location, size, and condition of the property. Where the property is self-occupied, the value is zero.
Capital value system –
The property tax is calculated as a percentage of the market value of the property. The market value of the property is determined by the government based on the locality in which the property is situated. The market value is revised annually.
Unit area system –
The tax is levied on the per-unit price of the carpet area or the built-up area of the property. Certain factors such as the location of the property, usage of the property, and the price are used to decide the expected returns of the property.
It is seen that property tax is a tax that is paid annually by the owner of the property. Property owners have the option of paying the tax of a real estate property either in a lump sum manner or in two installments. But the tax has to be paid before April 30th of the following financial year. Property owners who pay the entire tax before May 30th are entitled to claim a tax rebate of 5% on the tax paid by them. tax is imposed by the government to generate money for public purposes and to develop the amenities provided by them.