Property Tax in India

Property Tax in India

Property tax is a yearly fee you pay to the local government for owning a property in India. It's a central income source for cities and towns.

What kind of property gets taxed?

In India, property tax applies to real estate

•        Homes you live in (residential)
•        Buildings used for businesses (commercial)
•        Vacant land you own

How much is property tax?

The amount you pay depends on several aspects, like:

•        Location: Property taxes are generally higher in bigger cities.
•        Type of property: Commercial properties usually have higher taxes than homes.
•        Size of the property: Larger properties typically have higher taxes.
•        Age of the property: Older buildings may have lower taxes.
•        Amenities: Properties with amenities like parking can have slightly higher taxes.

How is property tax calculated?

There's no single procedure for calculating property tax across India. Different cities use diverse methods, but they all consider the factors mentioned above. 

•        Unit Area Value System: This method considers the price per square foot of the built-up area based on location and usage.
•        Capital Value System: This method uses a percentage of the market value of the property.
•        Annual Rental Value System: This method calculates tax based on the annual rent you could potentially earn from the property.

How to pay property tax?

Most cities now allow you to pay property tax online through the official website of your local municipality. You can usually find the option for "Property Tax" and then follow the steps for payment using debit card, credit card, or net banking.

Reducing your property tax burden:

There are a few ways to potentially reduce your property tax:

•        Standard Deduction: The government allows a deduction of up to 30% of the net annual value of your property (except for your only house).
•        Home Loan Interest Deduction: If you have a home loan, the interest you pay can be deducted from your taxable income under Section 24 of the Income Tax Act (with certain limitations).

Property tax rules can be very complex and may depend on your location.