Property tax is one of the responsibilities that go with being a real estate owner. It is a recurring tax that needs to be paid on a semi-annual or annual basis. In India, this tax is usually levied by the municipal authorities such as Panchayat, Municipality or Corporation and is one of the biggest sources of income for these authorities.
Property tax is levied on a variety of fixed and tangible assets including residential properties, improved plots, commercial properties, and industrial properties. The tax is levied based on the value of the property as calculated by the government. As the cost of real estate varies throughout the country as well as within different locales in a city, the municipal authorities charge property taxes at different rates.
The way to calculate taxes are different across India, but some of the commonly considered factors for this computation include:
- Type of property (residential, commercial, industrial)
- Occupancy (self-occupied or rental)
- Type of construction (number of floors, kutcha house or pucca house)
- Amenities (pool, car parking, etc)
The three popular methods used for calculating property tax include the following:
Unit Area Value System (UAS)
This system is popular in Bangalore and tax is levied as per the square foot cost of the built-up area of your property. The exact figure is fixed based on its location, usage, and land price and multiplied by its built-up area.
Capital Value System (CVS)
The property tax here is calculated as a percentage of the market value of the property as determined by the government. It is revised on an annual basis.
Annual Rental Value System (RVS)
The tax is calculated on the basis of the annual rental value of the property as determined by the municipal authorities and considers the location, condition of premises, its size, amenities, proximity to landmarks, etc.
You can even go online and find a property tax calculator to know the exact amount of property tax your piece of real estate incurs. To prevent payment of additional penalties of up to 2%, you should always pay your property taxes on time. While some municipalities provide options for easy online payments, others might require you to visit specifically designated banks or the municipality office itself. You will need the Khata number/property tax number to make valid payments.
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