The building tax, sometimes called house tax or property tax, is a local government charge levied by the municipality such as a panchayat, municipality, or municipal corporation. It is mostly meant for keeping up and looking after the various facilities available in the area like roads, sewage systems; lighting parks, etc. Normally, it is imposed on all real estate: buildings (residential/commercial), attached lands, and land improvements while empty lands not attached to any building are excluded from this taxation.
The property tax is determined by the local government on the appraised value of the property.
Three ways are majorly used to calculate building tax:
Capital Value System (CVS): It determines the amount of tax levied as a percentage of the market value of the property that is fixed by the government and based on the location of a property. The market value is revised every year and published. This system is followed in Mumbai.
Annual Rental Value System Or Rateable Value System (RVS): Under this system, the tax is calculated on the yearly rental value of the property, which may not necessarily be what is being paid as rent but it will be decided by municipal authority-based on size, area/location, condition, distance from landmark, etc. Municipal corporations like Hyderabad and Chennai follow this method for computing their tax revenue.
Unit Area Value System (UAS): This system levies taxes upon per unit price per square foot per month in built-up area multiplied by that area total. Delhi has municipalities such as Kolkata, Bengaluru, Patna, and Hyderabad that use this method to compute their Taxes.
You must pay your building tax in the MC office of that area or sometimes at banks that are approved by the municipal corporation. Property tax number is one of many details you may need to provide for identifying your property. In recent times, most Indian municipal taxes can be paid via respective municipal authorities’ websites online; hence it’s much more convenient for the holder of a plot. Some civic bodies might exempt owners from paying property rates but only under some conditions like where it is situated, its age, net income generated by the owner, or even the kind of premises as well as others. It is therefore advisable to crosscheck with local administration for such particulars and consequently evaluate your liability properly.
Property rates always have to be paid annually with late payments attracting interest on outstanding money owed which could go up to two per cent per month. The onus to pay property rates lies squarely with the property owner and not whoever occupies it.
