Property tax is the amount paid to a local governing body for a property. This amount is paid annually. Landowners pay property tax for the property they own. They pay the tax to a municipal corporation. Local governing bodies also collect taxes. This type of tax is usually considered to be regressive. Regressive taxes impact individuals who belong to low-income households as opposed to the wealthy.
What is property/house tax:
Property or house tax is paid on real estate assets such as a house, properties rented to others, residential spaces, and office buildings.
The municipal corporation collects these taxes in India. This is done once or twice a year. The municipal corporation assesses all the properties and looks at the size, area covered, construction, etc. After this, it collects a certain amount of tax.
- Property taxes are the main sources of income for any local government. The money needed for the city’s upkeep is paid through this tax. Staff payments, and office charges, are also covered by these taxes.
- Land or property owners must pay the property taxes on time. Not paying taxes on time can lead to fines.
- The NDMC, EDMC, and BBMP receive tax payments from the residents in their regions. These taxes are then divided between the region’s colonies and wards. Individuals need to find out which zone they live in. They should pay the correct amount of taxes to their local governing body.
Property taxes include water, lighting, and drainage tax. The taxes are calculated under two diverse categories. These are self-occupied properties and let-out properties.
- If the property is used only for residential reasons, the value will be 0 per year.
- If the property has not been let out or occupied, the annual value shall be put forth as 0.
- The annual value of the property can be determined if it has been let out for even a few months by the owner.
- It is determined by considering one or more of the following traits:
- A municipal appraisal
- Fair rent calculated by an information technology department
- The rent the owner has collected.
Different Types of Property exempted under Property/House Tax
- Any property owned by the central government.
- Buildings that are not allowed in the municipal register. They are also unlisted.
- Specific properties that are vacant. These include plots of land or buildings.
- Schools, graveyards/cremation grounds, and recreational buildings.
- Charitable institutions, religious places of worship, and trade union offices.
Deductions allowed while calculating property/house tax
- A deduction of up to 30% in the property tax is allowed. This deduction happens for the maintenance and repair of the property.
- The interest amount on a loan can be reduced for purchasing, repairing, or constructing a property.
- The maximum payable interest amount is around Rs 1,50,000, but only if the loan was given before April 1, 1999.
- If the loan was borrowed after April 1, 1999, the amount to be paid is Rs 30,000.
NDMC Property Tax
- The New Delhi Municipal Council is responsible for collecting taxes in the region. The Department of Property tax collects the tax. It also collects a service charge. It is collected from private properties and government-owned properties as well. The Supreme Court directed this. Any properties completed after January 26, 1950, must pay these taxes.
- All buildings and land in New Delhi are subject to property taxes. These taxes are mandatory.
- The NDMC decides the rate of taxes every year.
EDMC Property Tax
- The East Delhi Municipal Corporation charges tax on people buying properties in this region. Falling real estate prices motivated people to buy property in this area.
- East Delhi has many advantages in terms of development. This has caused growth in the real estate sector in that region.
- The official EDMC website can help you know more about the rules and regulations to be followed before and after buying a property in that region. You can pay the EDMC property taxes online or travel to an ITZ centre to pay the tax.
BBMP Property Tax
- The Bruhat Bengaluru Mahanagara Palike is the third level of government in Bengaluru. The BBMP is run by representatives known as corporators. They are elected in each region. They are from each of the wards located in the city.
- Each municipal corporation calculates taxes in different ways. The BBMP follows the UAV or the Unit Area Value System. The tax in the UAV System is determined by:
- The location of the property.
- The purpose for which it is being used
- The returns that are filed by the individual.
- The formula is as follows:
- Property tax (K)= (G-I)*20% + Applicable cess (property’s 24%).
- You can calculate the property taxes on your own with this formula.
- Always verify taxes with a professional in the real estate industry to avoid fines.
- The last date to pay the property tax at the BBMP is March 31, 2021.
It is important to stay up to date with all the taxation laws if you own a property. This can help you avoid any fines or imprisonment. It is important to keep yourself informed. Visit Piramal Finance to learn more about property taxes and stay on top of all the latest developments.