A Complete Property Tax Guide for 2022 : Importance, Calculation and Online Payment

The property tax is the tax we as individuals and organizations have to pay on land and buildings that we own. Local governments determine what amount of tax is due and it is based on several elements.

Paying this fee to the local government or the local municipality is not a one-time transaction, but rather an annual or semi-annual transaction. Property tax is payable on all real estate, which includes buildings and land attached to buildings, as well as improvements made to the land. In the case of a residential or commercial property, you are required to pay property tax either as the owner or as the occupant, as well as if it is rented out or left unoccupied.

However, if you own vacant land that is not adjoined by any construction, you aren't required to pay taxes on it.

The government needs to collect property tax money as it is used to maintain and provide civic amenities citizens need. Several basic things necessary to lead a comfortable and healthy life, such as building roads, replacing broken ones, and repairing sewage systems, as well as providing streetlights and providing safety measures, as well as maintaining public spaces like parks, depend heavily on taxes that we pay, especially property taxes.

Taxes on property are paid by who?

There are a lot of people who feel that property tax should not be paid because they don't use their property themselves. They believe that paying property taxes should be the responsibility of the tenant or the individual directly benefitting from the property. However, this is not how it works.

Following the law, property tax claims are made by the owner of the property. Property tax payments are the sole responsibility of the property owner, tenants cannot be held liable if tax is not paid.

In general, the amount of property tax you must pay on your property will vary from state to state and region to region. If you own a property in Mumbai and a property in Chennai of equal size, the property tax you pay for each house will be different.

Tax collecting agencies use different criteria to calculate the property tax you owe. Having said that, the entire process may seem unfair, therefore to bring about some transparency and consistency, a general guideline has been developed based on this formula:

Taxes for 2021-2022 are calculated based on the following factors: Base value x built up area x age of the building x type of building x category of use x floor factor.

This formula explains how your property tax value is determined based on the factors mentioned above. Several factors affect the price of a property, such as the land value, the area of construction and the amount of open space, age of the property, type (commercial or residential), type of ownership (self-owned or rented), and whether the building is a single or multi-story building.

The basic formula below can help you determine how much property tax you will have to pay. There are many property tax calculators online you can use if you're wondering how to calculate property tax online. On the online portals of each state, you can also find property tax calculators.

It is just a guideline for determining how much property tax you should pay based on how state governments calculate it. Apart from these, property taxes can be calculated by a variety of methods, such as –

• Capital Value Systems

The tax is calculated based on the market value of your property; in this method, the tax is based on the rental income received by the property. A government-set value for your property is based on the location of your property, and they continually adjust this value every year. The property tax you pay is determined by a percentage of the value assigned to your property.

• Unit Area Value System

It is through this method that a fixed price per unit value of the built-up area or carpet area of the property is determined. A per-unit price for a property is determined by factors such as the land price, the type of property, the location, and expected returns. To arrive at this number, you will need to multiply it by the built-up area of your property. Many cities are using this method, such as Bengaluru, New Delhi, Kolkata, Ahmedabad, Hyderabad, and Patna.

• Annual Rental Value System

A rateable value system assesses a property's annual “rentability” so that property tax is calculated and collected accordingly. Depending on the property's size, amenities, location, and distance to landmarks, the municipal entity will estimate the rental value. This does not take into account how much the owner collects in rent but rather the potential gross rent that the property can earn every year. This is used in cities such as Hyderabad and Chennai.

• Payment Options for Property Taxes

If you live in an area where your property is located, you are most likely to pay in person at the local municipal corporation office. In larger cities and towns, some municipal corporations have agreements with select banks that authorize them to collect property taxes on behalf of these corporations. 

Make sure you have your 'property tax number' or 'Khatha number' on hand when you visit a physical office. You can use cash or your credit card to pay the amount. Due to the development in India, you can now easily pay your property tax online. Since you can do it at any time and from anywhere, online tax payment is the preferred way to pay. Using this method, you can pay your property taxes more conveniently and flexibly.

• Online Property Tax Payment

Using the online system to pay your property tax is quick and easy. Websites can be accessed from a smartphone, computer, or laptop.

The first thing you need to do is visit the online portal for your city's municipal corporation (for example, Bangalore = bbmptax, Pune = pcmcindia).

You will need your name, assessment code, and application number once you've landed on the correct page. You have the option of paying your property tax online using a bank card if your bank is supported on the portal, or you can enter the key details and the process is seamless.

In addition to paying your property tax online, you can also do so via Google Pay. You can use the app on your phone and it is a great option for those on the go all the time. Below are the Google Pay instructions for paying your property taxes for 2021-2022.

• Open the application
• Pay your bills by going to Bill Payments
• Click on Municipal tax/services under 'Categories'
• Locate your city/municipal corporation
• Log in to your account
• Please enter the requested details such as property ID, mobile number, etc.
• Your payment will be processed quickly and without any problems, once your account has been created.
• Concessions and Exemptions that are Available When Paying Property Tax in 2021-2022

Property taxes are a necessity for everybody, but there are a few exceptions to the rule. To alleviate property taxes, the government has compiled a list of exempt people and properties, including:

1. It could be a church, burial ground, heritage site, etc. it is any building/lot that has been occupied for a specific purpose.
2. Charity property is any property used for charitable purposes.
3. Farmland and buildings that are used for agricultural purposes are exempt, except dwellings.
4. Generally, corporate taxpayers who own real estate with an interest in it are subject to the primary tax.
5. War widow and recipient of a gallantry award own and occupy this property.
6. Rebates and concessions are available -
7. For women, the elderly, and physically challenged people, a 30% concession is allowed.

1. Ex-servicemen are entitled to a 30% rebate.
2. In a given financial year, group housing flats are entitled to a 20% rebate.
3. In order to qualify for these concessions, a property must be used for residential purposes and be self-occupied.
4. Fines and penalties for failing to pay property taxes on time

Property taxes cannot be completely avoided (unless one is exempt). If you cannot avoid paying your property tax, you should not do it. When your property tax is not paid on time, you are subject to a late payment penalty.

Usually, you will be assessed a fine based on a certain percentage of the amount you owe. In some states, there are no fines, while in others, there are fines of 5% to 20%.