Since the inception of human civilisation, we are working to fulfil our basic needs of food, clothing and shelter. While the former two are comparatively easier to achieve, owning a property or a shelter is a dream come true for millions. Apart from house or a property being a basic necessity, it is considered as the safest and most clever form of investment. Owning a property is in itself an accomplishment for most of us.
Property being an asset and a source of income for many is taxable and the property tax is annually paid by the property owners to the state government or municipal corporation, as per the current government laws. The types of property that come under “property tax” may include:
How to calculate Property tax? The amount of property tax is determined by the annual value of the property. Other factors that contribute to the tax amount is the location, occupancy status, area coverage and quality of construction of the property. The tax collected by the government is used to maintain infrastructure such as roads, sanitation, schools, parks etc.
Annual value of the property is taken as zero for self occupied property. The self occupied property should be fully used for own residential stay. It should not be let out to tenants or should not be used for commercial purpose. In case the property is rented out for few months, annual value is calculated proportionally. For properties that are rent out, the annual value is either the annual rent received or calculated by the municipal corporation as per the rules of that state or city.
How to pay property tax? Thanks to e-governance and internet, property tax payments are not a hassle anymore as it used to be earlier. Municipal corporations provide websites, where users can log on, choose assessment year and pay property tax online. Individuals are required to fill their property identification number with relevant documents, choose the payment mode which can be internet banking or credit/debit cards and pay their house/property tax online.
In case an individual wants to pay property tax offline, the old fashioned way, they have to fill up appropriate forms and make payments at the bank suggested by the municipal corporations or at special cells set up by the government to collect tax from the citizens.
What happens when property tax is not paid? Late or non payment of property tax can attract fines or penalties which is equivalent to 5% to 20% (depending on state to state) of the total amount due. Certain cities can waive off or lower the penalties in a bid to get more people to clear their dues. Legal notices can be issued in case of non payment of property taxes to the government.
Exemption from property tax! Exemption from the property tax may be given based on age (super senior citizens), net income of an individual, location of property (for example, a drought hit area) or history of public service. In case the property owned is a vacant piece of land, owner does not have to pay property tax on it. Other details are available with the local municipal administration of the respective cities.