Property tax is levied on the ‘ownership’ of a property. In India, a tax is levied on all real estate, which includes the improvements made to land, buildings or land attached to buildings. A vacant plot of land without any construction on it is not liable to be taxed generally.
To have a detailed understanding of the law related to the property tax levied on a property, it is advised to seek advice from property lawyers in Kolkata.
The property tax is assessed by whom?
The local municipal authorities in India assess the value of the property and a proportionate tax is levied accordingly on the property, which shall be paid annually or semi-annually.
The revenue generated from the property tax is used to maintain and provide the amenities to the public such as road repairs, sewer systems, lighting, maintenance of areas such as parks, etc.
How to pay property tax?
In India, online payment of the property tax from the respective state government or the municipal authorities is possible. It has helped overcome the cumbersome procedure of payment of property tax used earlier. Now the payment for the property tax could be made through fast, convenient mobile payment as well.
The ‘property tax number’ or the ‘Khata number’ is required to be furnished in order to identify the property.
The tax could be paid through the offline mode as well. At the office of the municipal corporations or the Banks in the partnership with the respective authorities, the tax could be paid. Any late payment would be charged with a fine and interest as per the amount due to be paid.
To pay the property tax is the liability of the owner and not the one dwelling in such property.
Also, the income paid to the income tax department under the tag of ‘income from the house property’ is different from the payment of the property tax paid to the municipal authorities.
Calculation of the Property tax-
There are three different systems for cal\culating the property tax. Municipal corporations in different parts of the country adopt different systems to calculate the tax. This are-
1. Annual Rental Value System-
This system is based on the amount of the annual rentability of a property as fixed by the municipal body. It is not affected by the total rent collected in a body, but the gross rent that could be generated from such property if it is rented out. This system of taxation is followed by the Municipal Corporations of Chennai and Hyderabad. It is based on the various factors such as the location of the property, amenities available to the property, etc.
2. Capital Value Based System-
The market value of the property is used to levy tax on the property. The market value of different properties is different and is determined by the government and is revised annually. For instance, the Brihanmumbai Municipal Corporation accepted this system of taxation and provided the ‘Ready Reckoner’ of the fair value prices of different properties in the area.
3. Unit Area Value System-
This system of taxation is based on the fixed price per unit of the property in the area. Based on this price, the expected returns from the property are to be calculated. This system of taxation is followed by the municipalities of New Delhi, Bangalore, Kolkata, Hyderabad, Patna and Ahmedabad.
In case you are not aware of the proper mechanism of the property taxation, it is advised to seek the advice of property lawyers in Bangalore for the same.
How to save property tax without penalty?
The long term capital gains are exempted from the taxation under Section 54 of the IT Act, 1961 for the HUFs
The capital gains are used for the purchase of another house or its construction
The new house was bought one year before or two years after the sale of the other property.
The new house was constructed over a period of 3 years of the sale of the old property.
And in a few other circumstances, one does not have to file the property tax for the payment from the sale of the property. For further information it is advised to seek the advice of property lawyers in Delhi.
Conclusion
It is thus advised to pay your taxes timely, and to seek the legal assistance or opinion in case you face confusion. Lead India offers you an experienced team of the property lawyers, who have been successfully handling the cases related to the matters involved with the property and could provide you with the necessary assistance as required.
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