The deadline to pay property tax is approaching in several Indian cities. In Chennai, Tamil Nadu, homeowners must clear their dues by September 30, the cut-off date for the first half of the financial year. Property owners who miss the deadline may face late fees or interest charges.
Patna in Bihar follows the same schedule, with September 30 set as the last date for payment, post which a 1.5% penalty will be imposed. Here’s a detailed guide on how to clear your dues, available modes of payment, eligibility for rebates and how these taxes are calculated by the municipal body:
What is property tax and why is it collected?
Property tax is a direct tax levied by local municipal authorities on the ownership of real estate, including residential, commercial, and industrial properties on an annual basis.
This tax applies to both land and buildings, which is then used to maintain public facilities such as roads, sewage systems, street lighting and public parks.
It’s important to note that property tax rates are not uniform. They differ by state and even by city and municipality.
How is property tax calculated?
Property tax is generally calculated based on factors such as capital value of the property, or unit area value of the property, depending on the specific body’s method.
“Taxes like water benefit tax, sewerage tax, street tax and tree cess are also added to the general tax while assessing the property tax. These charges vary from one municipality to another,” said Pankaj Mathpal, Managing Director of Optima Money Managers.
In some cases, property owners might raise a dispute about the body’s property tax assessment being incorrect. “In such cases, property owners can challenge or appeal the incorrect assessments with the municipal authority,” he said.
How to pay property tax in India?
There are two ways of paying property tax in India. A taxpayer has the provision to choose between offline and online modes. Here’s a step-by-step process to pay your tax online:
- Go to your city’s municipal corporation website (for example, MCD in Delhi, BBMP in Bengaluru, BMC in Mumbai).
- Choose the ‘Property Tax’ or ‘Online Services’ section and then enter your Property Identification Number (PID), assessment number or account ID.
- Select the relevant financial year and verify your property details.
- Once you are done calculating the tax due, proceed to the payment gateway.
- You can pay the tax using net banking, debit card, credit card, or UPI.
- After payment is successfully made, download and save the digital property tax receipt for future reference.
For those taxpayers who prefer to make the payment offline, they can do so through the city’s municipal corporation office or designated banks.
“Some common mistakes to avoid while making online payment include entering wrong property ID, paying in wrong ward/zone, ignoring confirmation receipts, or missing the due date despite initiating payment,” Mathpal said.
Penalties for non-payment
If a property owner delays paying the due tax, penalties such as interest, fines, or late fees may be levied on top of the due tax.
However, if you don’t pay the tax at all, the dues can get attached to the property, creating hurdles in resale, loan approvals, and even exposing the owner to legal recovery actions.
Who is eligible for rebates on property taxes?
In some cases, a rebate or discount is granted by the municipal authority on the amount of tax payable.
Some rebates/concessions are given to owner-occupied properties, senior citizens-owned properties, and eco-friendly buildings, among a few others. However, that depends on area to area and one must check on their municipal portal to confirm the details.
“The rebates are decided by the municipality and there is no standard rule,” Mathpal said, citing an example. “Municipal Corporation of Greater Mumbai has exempted property tax for flats below 500 sq. ft.”
It’s important to note that the same rules apply for both residents and non-resident Indians (NRIs). Property tax remains the same for the property, whether owned by a resident or a non-resident. “NRIs must also pay property tax in India, usually online via the municipal portal. Rules remain the same, with no special exemption,” he noted.
