In India, owning property is similar to having a goldmine. Today in India, properties being considered the safest and smartest form of investment. The property provides us with a sense of security. The Property a place where a person can be true to himself or herself, a place which symbolizes a level of achievement. Every year, millions of house owners deal with property taxation. It is important to make sure that taxpayer is not being overcharged on property taxes. So it is significant to understand how the property tax is calculated and how property values are determined.
What is Property Tax?
A property tax is a charge on property that the owner is needed to pay. The Property tax is imposed by the governing authority of the jurisdiction in which the property is situated. For income tax basis in India, property is considered as a source of revenue. Hence, the tax is levied on that property. The Properties include flat, shop, building, etc. as well as the land belonging to the building. Under the Income Tax Act India, incomes from the properties are counted as one of the heads of income. The amount of tax imposed is calculated on the value of the property being taxed.
The local municipality authority levies the property tax for the maintenance of significant civic services in the city. Unlike the UK where the occupier is liable to pay the property tax, but in India, it is the liability of the property owner to pay the property tax to the concerned municipalities.
Property Tax – India
Property tax in India is levied on the real estates which include buildings, land attached to the buildings. The Vacant land (plot) without any adjoining building are not liable to be taxation under Property Tax head. This will be taxed as income from other sources. Let us take a look at properties which are liable to be taxed under property tax in India.
In India Property is classified into four categories, which help the government to estimate tax based on certain criteria.
- Land (without any construction or improvement.).
- Immovable properties.
- Factory Building.
- Personal property.
- Intangible property.
Important Aspects of Property Tax
The Property tax in India is to be paid on “real property”. Property tax amount is used to develop local amenities including road repairs, maintenance of parks and public schools, etc. Property tax varies from location to location and can be different in different cities and municipalities.
Components and Aspects of Property Tax
- Tax Base.
- Tax Collection System.
The Valuation of land, buildings is the base for Property Tax. The choice of a professional tax base whether the annual rental value or standardized are based tends to relate to social and political processes or concern. Consequently, one can observe different countries adopting different base for property tax assessment.
There is no one way to factor the correct rate for Property tax. Concentrating on the proper valuation of property to avoid underestimation of the tax base and to levy the tax at lowers rates seems a better practice than to have high tax rates and a narrow tax base.
Coverage is another critical component of any tax. There should be an attempt to bring each and every property onto the property tax books. The coverage was conventionally achieved through field survey by tax inspectors, but recent innovations such as the use of geographic information system(GISs) and information technologies for tax mapping and self-reporting from property owners.
Tax Collection System
The tax collection system is, of course, a critical component of any tax system; it is the most inefficient aspect of property in developing countries. The fiscal collection system consists of an enforcement mechanism stringent recovery provisions, and penalty provisions, which are weak in developing countries
Procedure to Pay Property Tax Online
The internet has made a great impact on how the world functions, simplifying lives. Paying property tax was reviewed as a huge hassle in the past. But with the aid of online services the payment of Property Tax is made easy. Most of the municipal corporations provide the Online payment of property tax, streamlining the process & saving valuable time.
Property Tax Online payment steps
- Visit the official website of corresponding municipality or city corporation.
- Select the tab indicating property tax & navigate to the payment option.
- Choose the right form based on the category under capital falls.
- Then taxpayer can select the assessment year( the year for which property tax needs to be calculated paid ).
- The taxpayer will then be required to fill in their property ID number & any other documents about their assets including the owner’s name.
- After successful completion of form filling the taxpayer can select the mode of payment, which could be credit card or debit cards or internet banking.
- After making the payment of Property Tax, the online taxpayer can take a print out of the challan for their reference.
Property Tax Calculator
Property tax varies according to the states where the property is situated. Different civic services use different methods to calculate Property tax, but the general overview of such calculations remains the same. The assessment of the property is carried out by regulating the area it is in, type, occupancy status, amenities provided the year of construction, type of construction carpeted square area of the property & Floor space index.
The formula for Property Tax Calculation.
Property tax = Base value * Age factor* built-up area* type of building * floor factor*category of use.
The tax on a property will differ according to the factors mentioned above and can be easily computed online, through the official website of the municipal corporation concerned.