Property Tax – Overview, Systems For Its Calculation & Payment Methods


According to a recent survey, real estate growth is estimated to reach 11.2% in India for the financial year of 2015 to 2020, indicating a rise of 10% from the financial years of 2010 to 2015. Moreover, there is already a higher demand for housing. Hence, this demand ensures the requirement of awareness of property tax among the citizens of India.

Overview Of Property Tax

If you are an owner of a property, you are liable to pay property tax. This type of tax is levied on all real estate across the country. Property tax is a government-mandated fee levied on a property which a property owner has to pay to the governing authority of the municipal corporation, under whose jurisdiction, your concerned property is located.

In India, property tax is applicable on real estates which comprise buildings or land adjacent to buildings. An owner of plots of land which are vacant and are not attached to any buildings is not required to pay any property tax to the local municipality. Vacant plot of land is generally taxed as income from various other sources.

There are several types of property which are liable to be taxed –

  • Self-occupied residential property.
  • Residential property which has been let out on rent.
  • Office property.
  • Property used for factories.
  • Storage facilities.
  • Business property.

Purchasing a house is regarded as one of the most important financial decisions of one’s life. However, moving into your newly bought home is not the end of your expenditure. So, property tax is a key element to keep in mind during the time of purchasing a property.

Calculation Of Property Tax

The location of your property plays a major role in determining the amount of property tax payable. Since property tax varies from state to state, there is no fixed method of calculating property tax.

Moreover, different municipal corporations follow unique methods to calculate property tax. They are –

  • ARV

Annual Rental Value or ARV is a system in which the local municipal authority determines the gross annual rent of a property. House taxes levied on that property is based on the estimated ARV of the said property.

  • CVS

In the case of CVS or Capital Value-based System, the amount of house tax is calculated on the market value of the property. Since market value is variable, the amount of tax levied on a property under this system is revised every 12 months.

  • UAS

UAS or Unit Area value System is the most common method of property tax calculation in India. The property tax is calculated as per the price of the unit area, based on the carpet-area or built-up area of the property. Other important elements such as floor factor, age of the property, are also considered for the calculation of property tax.

In mathematical terms, property tax = base value of property x floor factor x age factor x carpet area x category of use factor.

If you are late to pay your house taxes, you are liable to penal fees charged on the next quarter. The interest rate on your penalty fees ranges from 5% to 20% depending upon the property value and the concerned local municipal authority.

Payment Methods Of Property Tax

In recent times, you are not required to stand in long queues at the office of your local municipal corporation to pay your property taxes. You can avail a more convenient method by opting to pay property tax online just like when you learn how to apply for a loan against property online.

The online payment process comprises the following steps –

  • Visit the official website of your municipal corporation.
  • Navigate to the property tax payment tab and select the pay tax option.
  • Select the correct form based on the category your property belongs to.
  • Choose the assessment year, which is the year for which the tax is calculated.
  • Fill up the form with relevant information such as property identification number, address, etc. and attach the necessary documents as required.
  • Submit the form and select your mode of payment among several options such as credit or debit card, net banking, UPI, etc. On completion of payment, download the receipt for future reference.

Hence, considering the above steps, you can pay land tax online at the comfort of your desired time and place. It is as easy as opting for an online education on EMI.

The payment receipt of your house tax is an important document that assures credibility when you are mortgaging your property while availing a loan from financial institutions and reputed HFCs. This HFC also brings forth pre-approved offers that make availing a loan against property, quick and easy.

Pre-approved offers are also applicable to numerous other financial products such as home loans, personal loans, business loans, credit cards, etc. Check your pre-approved offer by providing your name and phone number.

The amount of property tax collected by our government is mainly used for public welfare such as construction and repairing of roads, sanitation, etc. This type of tax also includes taxes like water tax, drainage tax, lighting tax, etc.