Municipalities in India collect building tax or property tax on the basis of the property’s land value. Know how property tax is calculated and how you can pay it online
In India, municipal authorities collect land tax and property tax, also known as building tax, based on real estate valuation. This tax amount depends on the property’s worth and is tied to its location or land value. The rates and valuation methods also depend on other factors and vary widely across different municipal authorities.
In India, though land tax and building tax are used interchangeably, municipal authorities typically don’t levy tax on vacant land. However in some major cities, even vacant plots of land is taxed. In Delhi, for instance, according to official documents, “the rate of tax on vacant land in Delhi shall be between a minimum of six per cent and a maximum of 20 per cent of the annual value of such lands, as may be specified by the Corporation from time to time”.
Amit Gupta, chartered accountant, and managing director at SAG Infotech says that property tax is the main obligation for property owners in India. The rates vary from state to state, and typically ranges from 5-20 per cent of the property’s assessed value.
This tax is an annual obligation, with residential properties having deadline around November 1, though it can vary by state. Local governments determine the tax rate, typically as a percentage of the property’s assessed value. Late payments incur fines, sometimes up to 2 per cent per month in interest.
Property tax computations factor in diverse elements, such as location, occupancy status, type, amenities, construction year, floor space index, and carpeted square area. Says Gupta, “Different civic agencies employ various formulas to calculate the tax, and this can usually be done online through the municipal corporation’s official website.”
For instance, in Delhi, the unit area value method determines property tax. The formula for property tax is: Annual value multiplied by the tax rate. The annual value is calculated by multiplying the unit area value per square metre by the property’s size, and then factoring in the property’s age, how it is used, its structure, and whether it is rented out. Newer and rented-out properties get taxed more.
Here’s how you can pay your building tax online.
1] Navigate to the online tax portal of your municipal corporation. Many urban municipal bodies will have an online tax calculator on their portal.
2] Fill applicable details, such as ward, zone, sub-zone, occupancy type, date of effect, category, and carpet area. Your tax amount will be calculated.
3] For first-time taxpayers there may be an option to search the property from old legacy data using the search property option.
4] Existing taxpayers can directly log in to their account using mobile number generated OTP, and navigate to the ‘Pay Tax’ option by clicking on it.
5] Here you will be asked to enter a property account number (for instance in Delhi national capital region (Delhi NCR), it is called Unique Property Identification Code (UPIC)). The property information will be shown and one can verify the information and enter the tax amount and pay it through Netbanking or by using a debit or credit card.
6] Lastly, keep the online receipt generated for future reference. During scrutiny, if the department finds any difference in the tax declaration, it would levy a penalty in accordance with the rules.