So, you are planning to purchase a property and want to know about property tax. Here’s all you need to know about property tax and how to pay it.
A property tax is a tax that is on the property. Every property owner in the country has to pay the property tax as a part of their liability. The government of the jurisdiction levies the tax on the property’s location. This tax is levied by the national government, a federated state, a country, or any geographical area.
Property tax is usually considered as a real estate ad val tax. This tax is calculated by the local government where the property is present. Usually, this tax depends upon the property’s total area and the land’s value.
These taxes collected by the government are used for sewer improvements to fund water and provide law enforcement, fire protection, education, and the country’s development. Let’s dive into the article to learn more about property tax and how to pay it.
Understanding Property Tax In Depth
Every area in India has a different property rate that will allow you to pay as per the rules. You must ensure and scrutinize the essential applicable property tax whenever you purchase any property.
In many countries, immovable property tax represents a low proportion of taxes that will give you a glance at the total amount to be paid. With the current urbanization and development procedure, the value of such properties increases which encourage stability and proper development in real estate.
How Property Tax Works?
The amount owners calculate the property tax owed on the property multiplied by the current market value; this gives the direct value of the property. Most properties recalculate tax rates annually, and the real property includes lands, structures, or other fixed buildings.
On a fixed level, Municipal authorities hire a fax assessor that specifies the amount of tax collection that every owner needs to pay. They will assign the property taxes to the wonders on fixed market value, and this value becomes the addressed value of the house.
Types of Property Tax
Property tax is widely classified into many types. It is done to make calculations easy. Here are four types of Property tax in India, these are:
- Land: Land should be without any Construction work done over it
- Improvements made to the land include man-made immobile land and Constructions such as godowns and buildings.
- Personal property: Man-made vehicles like cars, bikes, etc
- Intangible properties: This has untouchable properties, like royalties and patents.
This classification gives you a glance at the property taxes and their types that you will consider in the future if you are about to purchase any property.
How to Calculate Property Tax?
The municipal authorities are the leaders in managing the property tax calculation. Property tax can be calculated in three ways:
CVS (Capital Value System)
In this, property tax is calculated by the government as a percentage of the property’s s market value based on the location.
UAS (Unit Area Value System)
Usually, the property tax one pays for a property is calculated by the total area the property covers, based on the price per square foot of the property. This price is determined by the expected returns of the property based on locations, usage, and property price.
RVS/ Annual Rental Value System/ Rateable Value System
This tax calculation system depends upon the property’s derived rental value. Usually, a municipality determines its value based on location, size, amenities, etc.
The following are some points that are considered before calculating property tax:
- Size of the property
- Property situation (Under construction or ready to possess)
- The owner’s gender
- The owner’s age
- The variety of civic services/ facilities provided by the local government.
- The formula for calculating property tax:
Property Tax= Build Up area* Age Factor* Building type* Category of use* Floor factor
This is how you can calculate the property tax value.
Property Tax Vs Real Estate Tax
People mostly consider the term real estate with property tax. However, the meaning of both is quite different so you need to understand the in-depth meaning of it. Considering other factors that influence the value. Property tax and real estate tax are partially similar. The real estate tax is a property tax, but not all are real estate taxes.
Example: Many jurisdictions levies on property tax against tangible personal property. As per the property tax, 43 states have filed for tax tangible personal property. Both property tax types are tax deductible if you file Schedule A with your income tax. This way you will get a piece of knowledge about the same.
How to Pay Property Tax Online?
Usually, in previous times paying a property tax was simple as everything was done in offline mode. However, with the current modernization, the payment procedure is online. Here are the following steps through which you can pay property tax online, following steps are:
- The first step before filing a property tax is to log in to the official portal of the municipal corporation site.
- After successful login to the portal, select the option ‘Property Tax’ and then choose the appropriate payment options through which you can make the payment.
- Fill out the property tax form and choose the assessment year you prefer.
- Select the chosen mode of payment. You can make necessary payments differently, such as by debit/credit cards or net banking.
- Successful payment of the tax generates an E-challan for confirmation.
How to Get a Tax Application Number?
It is essential to understand the tax application number necessary if you are paying through the online method. This way, your payment will be secure if, by any chance, your payment is done by the status is not updating. If you have done your payment online and want to know about the tax application number, follow the procedure:
- Open the municipal property tax portal.
- Navigate to the website and select ‘GIS-based New PID.’
- At the bottom of the page, you will discover “To know your new PID, Click here.”
- Enter the old application number and search.
- Choose the name and click on the “Fetch” button.
- The information will be displayed on the screen.
- Click on “View your property in Map” for more information.
- Locate your property on Google Maps.
- Details can be downloaded.
This way you can get your tax application number for your recent payment.
What is The Procedure For Paying Property Tax in Gujarat?
It never matters which part of India you are in and your residence. You might think about how to pay property tax in a particular state of India, and you need to understand the procedure for doing the same. Firstly let’s discuss the process of paying property tax.
- Residential and commercial properties in Gujarat are subjected to pay property tax. The authorities will further redirect your request whether your bill has been issued.
- Property tax of any area is calculated per the carpet area and other 4 factors such as Age factor, type of building, use of property, and occupancy factor.
- A penalty will be applied in case of late submission of the tax. The penalty is charged @18 % interest, 0.50 notice fee, and the remaining 25%as education cess.
- These taxes are collected on a half-yearly basis. The first half of the yearly bills are paid before 31 March, and the second half is paid on 15 October.
- Property taxes can be paid both online and offline.
- No cheating can be done as everything is scrutinized. If anyone fails, heavy penalties will be issued on the same.
What are the Means Through Which One Can Pay Property Tax in Gujarat?
There are several ways through which you can pay property tax such as you can apply through:
- If you are someone who pays property tax, the applicants can pay through the Paytm app. It offers you to complete the payment procedure through Paytm.
- On the PayTM app, you need to click on the “Municipality Payment” Option for further payment.
- The applicant is required to select the respective corporation from the list.
- Now, the applicant must enter property ID and other crucial details and click on “Get Tax Amount”.
- Now the required payable amount will be displayed on the screen. Click on the “Proceed to pay” option.
- Enter your payment details and make the payment.
- Download the payment summary for confirmation.
- This payment procedure completes in a few minutes.
- This method is easy than others. It is helpful for those who don’t have access to the internet.
- The first step is to get the property assessment from the respective authorities.
- It is necessary to bring the bill supplied/old bill/ old receipt of the last payment. If you don’t have any, please know the census number.
- One can get the payment details of property tax from the respective municipal ward office.
- Go to the municipal office to submit the bill and other required documents and pay the property tax to the counter.
- After receiving the tax amount, acknowledge the payment made. You can make the required payment by cash, cheque, D.D., Credit card, etc.
- Please keep the payment details and confirmation slip for future reference.
- If you are paying online mode, make sure you have the original property tax bill to proceed further.
- To pay property tax, one must visit the official portal.
- After visiting the portal, select the authority name from the list and hit the submit button.
- Users will be redirected to the respective payment options page after the submit button is clicked.
- After submitting the property tax, continue to process the online payment.
- Users will make payments through respective payment options such as credit/debit/net banking to complete the payment. After successful payment, users will get an acknowledgment for future reference.
These are the ways through which you can file your property tax.
What Are The Documents, Eligibility, And Fees Required For Paying Property Tax?
For someone new to making property tax payments, these are the documents you will need while doing the same:
- Bill (Unique Number)
- Old Property Bill
- Owner Name
- Authentic Address of the property
- Aadhaar Card
Eligibility for paying Property Tax:
- You must be an Indian citizen and of age 18 years ad above.
- You should have the property or land under your name in the state.
Fees For Paying Property Tax:
- The property tax amount must be based on the residential area. It varies from one property to another.
- Property tax depends upon- Basement area, rate prevalent in the street, building usage, types of occupancy, and the total area covered.
Note: The property tax paid is valid for one year, and the owner must renew it yearly.
After going through the property tax and how it is paid to the authorities, it is one of the central taxes every owner must pay. These taxes are paid yearly to ensure the property’s validity and authenticity. Every state and region in the country has varied tax amounts. So, the taxpayer must provide the payment amount as per their state.
Every citizen of Gujarat or any other state who owns a property for any purpose (commercial or residential ) is liable to pay tax to the municipal authorities every year.
How much is property tax in Gujarat?
The property tax varies as per the state and the category of the property. For residential property, you need to pay Rs. 16 per square meter, and for non-residential property, the taxpayer needs to pay Rs. 28 per square meter.
How much tax do you pay on a property?
Every property owner needs to pay taxes as per their covered area. The basic rate taxpayers pay is 18% of the total, and the highest and additional tax is 28% in total.
Do you pay property tax every year?
Yes, the property owner needs to pay property tax every year. The liability date for LPT is 1 November every year, which means you must pay property tax before 1 November every year if you are the liable person.
Do homeowners pay property tax?
Under the Income Tax act, income generated from house property is subjected to tax. The annual value of any property is taxable, and the property owners are liable to pay property taxes.