Property Tax

Property Tax


What Is Property Tax

When a tax is levied on a person for their property, it is known as Property tax. A particular amount in form of tax is charged from a person after valuation of their property. This tax goes in kitty of government. A person might have to pay multiple taxes under various other jurisdictions.

“Personal Property,” “Buildings,” and “Land” are three types of property on which property tax is being levied. When there is a combination of various properties together, it is termed as “Real Estate.” Under system of Property tax, state government does a valuation of property and then tax is estimated as per valuation. Not all states follow same property tax laws. It may vary as per rules and regulations of that particular state.

Property Tax in India

Municipal authority in India issues property tax. Tax, which is collected in form of property tax, is used for betterment of society. India is different from other countries, which levies property tax. In India, property tax is paid by the owner of property, whereas in other countries, person who occupies the property has to pay the tax. Property tax in India is measured on rent that is paid and future rent for that particular property. For those properties, which are not rented, estimation is done on basis of rent, which it can fetch in real estate market. Property tax in India is similar to property tax acts that are functioned in US. The owner has to pay the property tax. State government has power and authority to levy property tax. State government appoints officials, who decide rate of valuation, Band of tax, Methods of valuation and procedure for collecting tax. If a person does not pay their property tax on time, then they are penalized for that. Unoccupied or vacant land is not subjected for taxation. In addition, property, which belongs to central government, is exempted from tax. Only a nominal amount as service charge is charged. Foreign missionaries are also not in the bracket of property tax. They also have to pay services charges and some other taxes such as water tax, electricity charges etc. Panchayat rate system of taxation varies from property tax rate in urban areas.

Property tax is a great source of income for government; hence, it is being levied on individuals. Property tax is a branch of Income tax, and calculation or valuation is done on various measures and methods. If a person is having Home, Shop, Building etc, has to pay property tax.

Registration of homes and other properties is very important. A proper estimation of properties can only be done after registration. It is very important and essential to get the property registered. Valuation of property also helps a person in knowing value of their property so that it is easy for them to understand and know actual value of their property.

Calculating Property Tax India:

In India, property tax is being calculated in various ways. It is mostly calculated on “ANNUAL VALUE.” These values can be different on basis of properties.

Annual Value For Let Out Property:

Annual valuation of property can be equivalent to the following in case of property, which is lent out.

  • Rent Receivable
  • Valuation by Municipal
  • Department of Income Tax determining Rent

Deductions are allowed on property upto 30% for repairing and maintenance and on some special circumstances. On interest rate, deduction is allowed. These deductions are calculated on total value of property.

Annual Value for Self-Occupied Property:

Annual valuation is taken as “0” for property, which is self-occupied. It is possible only when it is used by a person just for residential usage and not for anything else. If that particular property is not used by the person, and if it is not given on rent, then again valuation of that particular property would be zero. But in case property is being given on rent just for a few months, then tax will be calculated as per that that time duration on which property was given out on rent.

Deductions are allowed on interest that a person has to give on loan, which is taken for purchasing or for construction of any property. Interest rate and deductions are applicable only on amount of loan that is taken.