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
- 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%.