Understanding Property Tax, Bill Payment and How it is Calculated

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Property tax, in any state, is the primary source of income for the local government or municipal corporation for any given area. It is levied yearly and paying property tax bill is among the many financial responsibilities you have as a citizen and a landowner in India. In India, all types of property are taxable with some states offering concessions for vacant land.

With the income earned from the municipal tax collected, the body in charge provides the area under their jurisdiction with infrastructural improvements and development. In fact, property tax can be used to ensure the maintenance of basic civic amenities such as roads, drainage, public parks, and others.

To know more and to understand property tax, bill payment both online and offline, and the different methods by which tax is calculated, read on.

How is property tax calculated?

Before learning how property tax is calculated, it is important to note that the local municipal authorities are responsible for assessing and levying the tax. For instance, citizens and landowners residing in North Delhi are responsible to pay to the North Delhi Municipal Corporation or NDMC Property tax collected here may have a different procedure for payment or have special provisions not available elsewhere. Further, the method for property tax calculation differs with municipal corporations and the tax applicable is assessed differently.

There are 3 main systems that municipal corporations can choose from.

  1. Unit Area Value System: Here, there is a fixed price per unit value of the built-up area or carpet area. This price is then used to calculate the expected returns.

  2. Annual Rental Value System: Here, the municipal tax amount is based on the property’s ‘rentability’ on a yearly basis as per the municipality’s protocol. The annual rent value accounts for several factors of the property and not the actual rent that you may get for it, should you choose to let it out.
     
  3. Capital Value-based System: Here, the market-value of the property determines the municipal tax applicable for it. Different properties and types of property have varying market values, which is usually determined by the government annually.

How can you pay property or house tax online?

To pay house tax online, you will need to have your property identification number on hand. This is a key part of the process as it will be needed to access, compute and verify municipal tax details applicable to the property. With the number on hand, here are the basic steps to follow.

  1. Log on to the official website for your municipal corporation
  2. Click on the option that leads to the property tax section
  3. Select the online payment option and choose the right form, either 4 or 5
  4. Pick the assessment year
  5. Enter the property identification number and submit
  6. Verify property details and check the municipal tax amount payable
  7. Choose a payment option
  8. Pay the property tax bill and print the challan for evidence purpose

How can you pay property tax offline?

To pay the property tax bill offline, you will require the property identification number or the ‘Khatha number’. With it, you can approach the offices of your municipal corporation or any banks that are in partnership with these authorities. Some states have special provisions that allow you to pay the property tax bill elsewhere.

This information arms you with the basic importance of property tax and the role it plays. Naturally, a large segment of unpaid tax does affect the area and inhibits infrastructural development. To remedy this, being informed about property tax can come in handy and motivate a push toward diligent property tax bill payment.