In a country like India, owning property is similar to owning a goldmine, making it one of the most important decisions of your life, and eventually becoming an asset that helps build wealth over time. However, owning property comes with associated ‘property tax’, one of the several taxes a purchaser has to pay.
So, what is property tax?
Taxes are the primary source of income for a government, with the taxes earned dictating the resources available to citizens. Every property is an asset which is taxable, and while stamp-duty and registration are one-time charges, the property tax is a recurring charge that the owner has to pay every year. This tax could be paid either to the local state government or Municipal Corporation, depending on government policies.
Now, how do you calculate property tax?
Primarily, property tax serves as a revenue source for the government to fund different services such as clean-ups, sanitation, pest control etc., and if the person refuses to pay the intended amount, then a legal notice can be issued. Amount of property tax implication is decided by the municipal body together, with some other factors that decide total property tax liability for a property owner. These other factors include: –
- Location of the property.
- Size of the property.
- Whether the property is under construction or ready to move.
- Gender of the property owner – there may be discounts for female owners.
- Age of the property owner – there may be discounts for senior citizens.
- Civic facilities provided by the municipal body in the locality.
On the basis of the recent property valuation done by the authorities, property tax liability is decided. The receipt in respect of property tax payment also comes in handy when there is some dispute, as it can then help in deciding the genuine property owner. In addition, worship set-ups, foreign embassies as well as government establishments do not require property tax payment.
Last but not the least, why is it important to pay property tax?
Property tax is calculated, according to the recent property valuation conducted by the municipal body. Only the owner of the property is liable to pay property tax. Hence, if you are a tenant, you need not be concerned about it.
Thinking of owning your own home? Apply here for a home loan.
In case of a property dispute, the property tax receipt plays a crucial role, to prove ownership of property. Consequently, when you buy a property, the title of the property should be updated in the municipal records.
While getting the property registered in your name at the local municipal records, you may be asked to provide documents to prove the ownership of the property. A property tax receipt is also a key document, for availing of loans, such as a loan against property.
Hence you must make the property tax payments on time and keep your records updated.