Property Tax Guide: Importance, Calculation and Online Payment

Property Tax Guide: Importance, Calculation and Online Payment
August 12, 2019 | Building

When you buy a home, there are several taxes that you are obliged to pay. While stamp-duty and registration are one-time charges, the property tax is something that a homeowner needs to pay annually to the government, every year.

What is a Property Tax?

A Property Tax or House Tax in India is taxed by the local self-governing authorities for the proper maintenance of basic civic amenities such as roads, sewers, parks, street lighting amongst other infrastructure.

Property tax is applicable to any tangible assets owned by a person such as residential or commercial property, or space which has been rented out to another person. The tax amount varies from state to state, location to location and is different according to cities and municipalities. Once, paid the receipt should be preserved as it will hold as evidence of due diligence if and when you decide to sell your property.

In India, Property Tax is levied on buildings or land attached to buildings. Vacant plots of land (ie land without any adjoining building) are not liable to be taxed. Residential houses – both self-occupied and let out, office building, factory and other commercial buildings, godowns, flats etc are liable to be taxed. Whereas, certain establishments such as government buildings, places of worship, foreign embassies etc are usually exempted.

Why is it important to pay Property Tax?

Calculation of Property Tax is done, based on the recent property valuation conducted by the municipal body. Only the owner of the property is liable to pay the tax. If you are a tenant, it doesn’t concern you.

  • The Property Tax receipt plays a vital role in case of property disputes, as it helps to prove the ownership of the property.
  • The Property Tax receipt is also a key document while getting a property registered in your name.
  • Property Tax receipt comes handy while availing loans, especially in the case of a loan against property.

Hence, it is very important that you pay the Property Tax on time and keep your records updated.

How do you calculate Property Tax?

Apart from the location of the property, many other factors determine the amount of property tax payable, such as:

  • Size of the property
  • Whether the property is under construction or ready to occupy
  • Gender and age of the property owner – there might be a consideration for female and senior citizens

Can Property Tax be paid online?

Yes paying Property Taxes online is a more viable way and Sanchaya is an e-governance platform designed by Kerala Government exclusively for his purpose. Sanchaya makes it easy for the public to pay their building or property tax, profession tax, rent on land and building and licenses and even utility payments conveniently.

Non-payment of Property Tax is a serious offence and comes with heavy penalties and fines. The amount of the fine and the tenure for punishment vary from state to state. Late payment of the same invites up to 5 to 20 per cent added interest, and in extreme cases, the property can be confiscated.

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