A Complete Guide to Property Tax

property tax

A Complete Guide to Property Tax


One of the most significant choices a person ever makes is whether or not to buy a home. It is something that everybody hopes to acquire at some point. Along with food and clothing, housing is one of the most essential needs for human survival.


What is property tax?

Property taxes are a type of local tax that is paid by municipalities to support the maintenance of important public amenities like roads, water, sewage, sanitation, drainage, and lighting. Every state, city, and municipality have a different property tax. It serves as the principal source of income for all governments in the world.

In India, both the land and the improvements on it are subject to property tax which the government levies in proportion to the value of the land. The municipality is in charge of assessing the property and determining the required annual payment of property taxes, which varies depending on where you live. Here, both the structures and the land they are built on are subject to property tax. Taxes are not due on vacant lands with no structures next to them.


Factors influencing property tax

  • The size and location of the property
  • Construction Stages (Ready-to-move or under-construction)
  • The gender of the landowner (incentives for female owners)
  • The age of the landowner (exemptions for senior citizens)
  • The infrastructure of the local government

Calculation of property tax

The following table lists the three approaches to calculating property taxes-

  • Annual Rental Value Method- The annual predicted rent for a property, as decided by the local government, serves as the basis for this taxation scheme. In this method, potential annual gross rent rather than actual rent actually paid on the property is taken into account. The size, location, and amenities of the property are among the considerations for figuring up the annual rental value.
    Under the capital value system, property taxes are assessed based on a property’s market worth. The local government determines the market value of properties and updates it yearly depending on supply and demand as well as the condition of the local infrastructure. The municipal authority releases Ready Reckoner rates annually for various areas surrounding the city to allow for a fair comparison.
  • Unit Area Value Method- This system is based on property size and determines the price of the built-up area of the property. Based on this price, the property’s annual estimated profits are calculated, and related taxes are levied.
    Several exclusions are taken into consideration when it comes to taxation in our country. Depending on factors like age (very elderly persons), geography (famine-affected areas), individual net income (LIG), type of property, etc., few local governments offer property tax exemptions.
  • Capital Value Method- This is a simple technique for calculating property taxes; using this method, the market value of your property serves as the foundation upon which property taxes are assessed. The government establishes the property’s worth based on where it is located, and they update this rate yearly. You will be required to pay a portion of the value that has been assigned to your property as property tax.


– Capital value= (Property Market value) x (Carpet Area) x (Age of building Weightage) x (Construction type Weightage)

– Property Tax= (Base Value) × (Built-up Area) × (Age Factor) × (Type of building) × (Category of Use) × (Floor Factor)


The property tax assessment is based on a number of factors, including the property’s location, type (commercial, residential, etc.), occupancy status (self-occupied or rented out), amenities (car park, rainwater harvesting, etc.), age (multi-story, single floor, pukka or kachcha, etc.), FSI, and other factors.


Property tax payment

The official websites of local governments in India allow for the online payment of land-related services and property taxes. Due to this, it is now quick and simple to pay property taxes, which was previously a time-consuming process. The local government has designated banks where property tax can be paid in person or in person offline at municipal offices. The tax is always the responsibility of the property owner, not the occupant.

If you fail to pay your property taxes on time, you will be charged a penalty which is often a percentage of the total amount you owe. Property tax evasion is a serious offense that can carry hefty fines that vary from state to state. Property tax late fees typically range from 5 to 20 percent of the total amount payable. In dire circumstances, the property might be seized.



The amount of money paid by property owners to the municipal corporation or the local government of the region where the property is located is known as the property tax or house tax. The property includes any tangible real estate, a person’s home, or an office building that the owner has rented out to a third party.

The government uses the money it receives in property taxes to maintain or repair a variety of public services, including roads, parks, schools, sewage systems, etc. It is crucial for every property owner to know every piece of information related to this type of tax and pay it as per the requirements.


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Achyut Group is a trusted brand due to its ethical values among its customer, vendors, and competitors. We believe in creating environment-friendly green buildings by conserving energy, water, and wood. The promoters of Achyut Group combine over 20+ years of experience in the construction legal, finance, and marketing sector.

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