Everything That You Need To Know About Property Tax

byMrinal MandalLast Updated: March 7, 2023

Property tax is a tax that is paid on the property owned by any individual or any other legal entity. In simple terms, it is a tax paid by the landowners to the local municipal body or the government.

Property tax applies to all types of tangible properties of an individual owner, which includes residential property, attached lands, office spaces, or any other property rented to third parties. Property tax has an annual payment cycle and is paid either to the local municipality body or the state government, depending on the policies.

Types of Properties in India

The types of properties for which the property owners have to pay taxes are-

  • Residential home
  • Flat
  • Commercial building

These are the types of property that attract property tax. It is important to note that the empty lands do not attract property tax. Apart from these, any intangible property such as a vehicle does not attract property tax either.

Role of the Municipalities in the Property Tax

Property tax may vary from one location to another. It is the responsibility of the municipality to assess the property tax of each property. The individuals can pay their property tax annually or twice a year, as per their convenience. The amount collected from the property tax is used for the development and maintenance of local amenities such as roads, parks, sewer lines etc.

Interest Rates on the Property Tax

The individual landowners or any other legal entities, who are entitled to pay property tax may have to pay an additional interest rate on the property tax, in case they fail to pay it on time. This interest rate may vary from one place to another or from one municipality to another. The interest rate ranges from 5% to 20%.

Also Read: How to Calculate Property Tax?

Is the property tax paid to the central government?
No, the property tax is paid to the local municipality bodies or the state government depending upon the policies of the place.
Are the tenants entitled to pay property tax?
In many countries, tenants are entitled to pay the property tax but that’s not the case in India. Here, only the landowners are responsible for paying the property tax.
What are some cases of getting an exemption from property tax?
There are several possibilities where the individuals are exempted from their property tax, such as their age (for senior citizens), net income, type of property, former public servant etc. It is important to note that there is no property tax on empty lands.
Can the property tax be higher than the value of the property itself?
No, the property tax cannot be higher than the actual value of the property. In case, any individual finds himself in such a situation, then it may be either because they are not aware of the actual market value or there is a miscalculation.

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