10 Important Things To Know About Property Tax Payment

10 Important Things To Know About Property Tax Payment

As an owner of a property, there are numerous taxes collected by the government from you, and one of the most important ones is the property tax. Property tax is considered the major source of revenue for the government. 

Let’s take a brief look at property tax. Your ‘property’ on which the property tax is paid is considered a real estate tangible asset. Property can be commercial and residential, which can be rented out to another person. The property owner has to pay a sum of money which is known as property tax. The property tax payment is calculated based on formulae. Learning about the property tax is a fundamental right of every person. So let’s look at some important things about the payment of property tax. 

Types of property tax

In India, the property tax is classified into four types which help the government with tax estimation. The divisions of property in the country are mentioned below.

  • Land: – This is the basic form without any improvement or construction. 
  • Improvements in the land: – This includes immovable creations such as go-downs and buildings. 
  • Personal property: – It includes movable objects such as cars, cranes, or buses. 

Intangible property factors that influence property tax

  • Size and location of the property
  • Ready to move property or under construction
  • Gender: – The female owners might get rebates
  • Age: – The super senior citizens might be charged lower rates
  • Facilities which are provided from the various municipal body in the locality

The current condition of Property tax

The property tax payment is made on the real property. The government appraises the monetary value of the property and assesses the tax to its value. The municipality of the particular area is responsible for determining and evaluating the property tax, either to be paid semi-annually or annually. The amount of tax collected is used to repair the road and maintain public schools and parks. The property tax differs from place to place. 

Property tax calculation

There are three types of property tax calculation. 

The different municipal corporations adopt different ways. Every person has the right to know about the calculations of property tax payments

  • Annual Rental value system: – This calculates the amount of tax payable on the annual rentability of the property, which the municipal corporation fixes. This doesn’t refer to the actual rent collected on the property but uses the yearly gross rent capacity, which can be expected to be rented out. This type of system is being followed by the Hyderabad and Chennai corporations. Numerous factors such as the location, property size, amenities, etc., are looked at while assessing the annual value.
  • Capital Value-based system: – The market worth of property is being utilized as the premise on which local charge is levied—market worth of the various properties controlled by the government body are re-examined every year. For instance, the Brihanmumbai Municipal Corporation changed to this framework and gave a ‘Ready Reckoner’ to accumulate reasonable property value across the city.
  • Unit Area value System: – This framework fixes the cost per unit worth of the developed area or the property’s floor space. Based on the price, the returns are being calculated from the property. This framework is being followed in various municipalities such as Bangalore, New Delhi, Hyderabad, Ahmedabad, Patna, and Kolkata. 

The municipal corporations also give certain exceptions from the property tax paymentbased on age (senior citizens), area (starvation influenced region), the income of the individual, kind of property, etc. Therefore, it will be best to check out thoroughly with the nearby administration for the details of the property value.

Applicable tax rates in different cities

Every municipal corporation has its method for property tax calculation. The tax calculation is based upon factors such as size, type, property age, residential, commercial, or agricultural. 

  • Municipal Corporation of Delhi: – The MCD property tax is calculated based on the unit per area system. The property tax of Delhi differs from 6 to 20 percent of the property value. 
  • Bruhat Bengaluru Mahanagar Palika: – The BBMP property tax is also calculated based on the unit per area system. The property tax of Bengaluru differs from 6 to 20 percent of the property value. 
  • Greater Hyderabad Municipal Corporation: – The ghmc property tax follows the unit per area value system where the framework fixes the cost per unit of the mat area of the property. The tax rate differs from 8 to 20 percent of the property value. 

Modes of paying property tax

Depending upon the municipality, the tax is paid yearly or half-yearly. Some municipal corporations have the site to permit the owners to pay tax online. The owners also can pay the tax at the office. The documents required while paying the tax are property type, house number, complete location address, bank details, tax number, etc. 

Steps to pay property tax online

Nowadays, the internet has made a significant impact on the world’s day-to-day activities. In the past, the property tax payment was such a hassle. Now, most municipal corporations provide the option of paying tax online.

Look at the steps for online property tax payment:

  1. Log in to the city corporation’s official website. 
  2. Choose the property tax and navigate to the payment option. 
  3. Choose the form (either 4 or 5) based on the type of property. The documents are used to determine if any changes are made to the property. 
  4. Select the assessment year. 
  5. Then fill up the property identification number and the other documents related to the property. 
  6. Choose the mode of payment. 

Tax deductions against income from property

According to ‘Section 24’ the tax is deducted against the income generated from the property. Therefore, it is applicable in the following cases: 

  • Renting out your house: – The rent that is received will be considered as the income.
  • If you own more than one house, then the NAV of the property will be considered as your income except for the house you are living in. 
  • If you own a single house and you are staying in it, then your income will be NIL.

Why is property tax payment important? 

It is extremely important because the government authorities provide the necessities such as drainage, cleanliness, water, etc., from the property tax payment. The salary of government employees also comes from the tax which is collected. If you fail to pay the tax, there is some penalty that is implied by the authority. 

The penalty of non-payment of tax

If you fail to pay the tax on time, it will create problems while selling the property. According to the property law, at the point of registration, the property owner needs to submit the tax payment receipts of the property as a clear title. If the owner fails to do so, then it will result in deal cancellation. In addition, the legal authorities may impose the charges on the property owner due to the tax payment failure. 


So, these were some important things which you have to know about property tax payment. Knowing about the property tax is an intellectual property right of an owner. So every owner should keep these points in your mind.

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