- What is property tax called?
- Calculation of property tax
- Penalty equal to arrears
What is Property Tax : Buying property is one of the most important investment options; But many people do not have a clear understanding of how to choose the right property, what is the right time to invest and what are the important things to keep in mind while choosing. Amidst all these doubts, one very important question often arises: Property Tax. But what exactly is property tax and how is it calculated”text-align: justify;”> 8th Pay Commission: Questions asked by 8th Pay Commission regarding Dearness Allowance… Central employees have till 31st May
What exactly is Property Tax?
Property tax is also known as ‘Gharpatti’ in common parlance. It is an annual tax levied by the Municipal Corporation or Local Self-Government. Owners of houses, flats or land are required to pay this tax. The revenue collected from this tax is used for essential civic amenities in cities such as roads, parks, sewage management, street lights and sanitation services. It is an ‘ad valorem’ tax which means that the higher the value of the property, the higher the tax amount. Penalties ranging from 5% to 20% can be levied if this tax is not paid on time. In many areas, interest is also charged on the overdue amount. In short, this tax is not just an expense; So it is your personal contribution towards the development of your city.
Calculation of property tax
Property tax calculation may vary slightly from city to city. But in most places the same common formula is used. That formula is as follows: Property Tax = (Base Value × Built-up Area × Age Factor × Type of Building × Category of Use) – Depreciation i.e. Property Tax = (Base Value × Built-up Area × Age Factor × Type of Building × Category of Use) – Depreciation.
The basic value is based on the rates fixed by the government for a particular locality. ‘Built-up area’ includes the entire surface including walls. For new buildings the age factor is higher, while in the case of older structures the tax rate is reduced due to depreciation. Tax liabilities depend on factors such as location, size, type and use of the property. Properties in elite areas or properties classified as commercial properties are taxed more. Residential properties used for own living often receive tax breaks, while properties rented out to tenants may have higher taxes.
For example, in a city like Noida, the average annual tax for a 2BHK flat of 1000 square feet can range between 6000 to 12000. It depends on the location of the flat, sector and its usage. The exact amount of tax can be ascertained only by actual verification.
Penalty equal to arrears
Failure to pay taxes on time can lead to huge financial losses. According to a report by Zee Biz, in case of tax arrears in Bangalore, a fine equal to the arrears plus 15 percent annual interest can be levied. In cases where arrears remain pending for a long time, asset seizure proceedings may also be initiated.
There are many easy ways to reduce your tax liability. 5 to 10 percent discount is available if tax is paid in advance. In many areas, special tax exemptions are given to senior citizens, disabled persons and ex-servicemen. Old buildings also get tax relief through Depreciation Allowances. Plot Tax is also applicable on vacant plots. The legal liability for tax lies solely with the property owner, not the tenant.
Expert opinion
Forteasia Realty Pvt. Ltd. Director of Mr. According to Shiv Garg, when considering the total cost of owning a home or property, property tax is an important factor in it. This tax is determined by the local administration and is levied based on the location, size and value of the property. Whether the property is vacant or in use, payment of this tax is mandatory from the actual owner. Often people ignore this tax, as a result of which they are likely to be penalized later. In the real estate sector, payment of this tax is essential not only to avoid legal complications, but also to facilitate future sale of the property; Therefore, prospective buyers should keep this aspect in mind. Check your tax status regularly through your municipal corporation website or app. Paying property tax is a legal obligation. Paying taxes on time saves you from fines and contributes to the betterment of the city. Don’t forget to take advantage of any early tax filing discounts.
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