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What is Property Tax & How to Pay Property Tax Online

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Property tax is the term used to describe the tax assessed on land and structures built on such land. The provisions relating to the state of Tamil Nadu’s property tax are included in the VII schedule of the Indian Constitution. Property tax is seen as a tax of considerable necessity and importance because it is one of the main sources of revenue for the state’s municipal budget, which is vital for the development of the state as a whole. In this post, we look closely at Tamil Nadu’s property tax laws and try to understand them to become informed and improved citizens of the country.

What is Property Tax?

Property tax refers to the amount a landlord pays to the local government or municipal body. A person is responsible for paying property tax on tangible real estate, including but not necessarily restricted to offices, homes, and other properties they have held and rented out to others. The amount of property tax collected by the municipal corporation is determined by the construction, area, property size, building situated on the same and other factors that may appear relevant as per the state’s laws applicable and are assessed yearly or semi-annually. 

The municipality or government uses the revenue from collecting property taxes to fix roads, build schools, colleges or other structures, and uplift and maintain sanitary conditions of the state’s people. Properties owned by the federal government and abandoned homes are often free from property taxes.

How can I compute Property Tax?

A building’s property tax is determined by several factors, including the size of the basement, the tax rate in the neighbourhood where the property is situated, the use of the building, which might be either residential or non-residential access, the type of occupancy say, like the owner or tenant, and the length of time the building has been standing or being situated in such place.

Property tax online payment

Every landowner is required to pay property tax twice a year, with the deadlines being March and September. Landowners can, however, also opt to pay the property tax yearly.

Property taxes may be paid in one of two ways:

  • Paying the revenue officer or assistant revenue officer of the Zonal offices I through XV.
  • Transferring money between any Axis Bank, Canara Bank, City Union Bank, HDFC Bank, ICICI Bank, IDBI Bank, or Indian Overseas Bank branch.

Revising the Norms of Property Tax

According to a Government Order or GO issued by the Tamil Nadu government on April 1st of 2018, all urban local bodies must adopt a general property tax adjustment for the current half year 2018–19 by the rules outlined and provided in the Urban Local Bodies Act. For residential structures, the updated property tax has increased by 50%, while commercial buildings have seen an increase of 100%.

What must be taken care of while filling out the Self Declaration Forms?

You may quickly get self-declaration forms from the corporation’s website. The applicant can acquire the application form from the relevant zonal office in areas where residents cannot use the Internet. To get online alerts from various civic services, the applicant must register their cellphone number with the Corporation at the time of registration. The applicant’s cellphone number can be utilized for OTP verification of the homeowner’s property tax history if it has previously been registered. Before the online verification, a house owner might register his or her cellphone number if he or she hasn’t already.

The applicant must have basic information available, such as zone number, division number, and bill number while filling out the online application form. These specifics are included on a person’s property tax card.

Details that are required or basic for property tax payment

To pay the property tax and file the same, the authority shall require certain basic details, and the taxpayer should ensure that these basic details are available on hand with him/ her. These details would include the following:

  • The individual plots and their land area
  • The year in which the building was constructed
  • Floor area of such building or property, whether non-residential or residential and permanent or semi-permanent.

Processing of the Application

How do you check property tax online? The homeowner receives an SMS acknowledging receipt of the application form along with a reference number when it has been submitted. A stamped acknowledgement counterfoil will be sent to candidates who submit their applications offline.

How can I determine the Annual Value?

For determining the annual value of a property, there are 5 easy steps, which are outlined and explained below:

  • Basic Value Determination

The fundamental value is the monthly rental yield per square foot of residential properties. This applies to the taxation on the annual rental value of the buildings and lands in all Municipalities and Township committees of various zones. Instructions about converting newly constructed residential (RCC) structures measuring 1000 square feet into a rental value per square foot have been provided to estimate the fundamental value.

  • Depreciation of Property

The annual value of the property shall be reduced based on the years the building existed or simply the age of such buildings. Based on the age of the building, the following depreciation percentages shall be applicable:

  • For buildings which are up to 5 years old – No depreciation shall be applicable
  • Buildings which are older from 5 to 15 years – A 15% depreciation shall be applied
  • Buildings existing for or older than 20 years – A 20% depreciation shall be applied.
  • Occupation of Building or Property

If the building or property is occupied by the owners themselves, then a discount of 30% shall be applied to the same value.

  • Nature of the Property or Building

Buildings are divided into three categories for taxation: thatched, tiled, and RCC. For these categories, the following discount consequences apply:

  • Buildings that have thatched roofs are eligible for a discount at the rate of 50%.
  • Tile, GA, AC sheet, etc., are determined to be eligible for a discount of 25%. Discount.
  • RCC structures are not determined to be eligible for any discounts.
  • Ceiling

Tax increases typically occur once every five years. These increases must be appropriate to avoid placing an excessive burden on the taxpayer. In light of this, the following restrictions are placed on tax increases by the revenue authorities:

  • The increase shouldn’t be greater than 25% for owner-occupied residential properties.
  • It shouldn’t be higher than 50% in rented residential structures.
  • It shouldn’t be higher than 100% for industrial structures.
  • The property tax assessment shouldn’t be more than 150 percent for commercial properties.

Conclusion

The appropriate municipal authority assesses, imposes, and collects property tax from property owners. It is sometimes known as municipal tax or house tax. The money raised from the tax is used to maintain and repair local public facilities such as sidewalks, roads, sewage systems, parks, lighting, and others. Late property tax payments may eventually lead to legal issues. We outline the tax rate and the benefits of paying it.

Anyone who owns the property, whether an apartment, a business building, or a piece of land, must pay property taxes to the government to use the fundamental public services offered on and surrounding the property. However, some types of assets or owners are exempt from paying tax or have a lower tax rate than others. For instance, normally, property used for church or agriculture is free from this tax. The same is true for property owners who are veterans, women, older citizens, or disabled, among other groups. To accurately determine your tax due, verify the rate and the rules.

Remember that the property tax contributes to the municipal finances, which are used to pay the wages of municipal employees, such as those who sweep the roads or maintain the local sewage system.

In addition, there is a fee for late payments or missed deadlines. You’ll be required to pay a penalty in the form of punitive interest on the outstanding balance. The relevant authorities determine the tariff. For instance, MCD levies a monthly fee of 1% on the amount owed, whereas Bruhat Bengaluru Mahanagara Palike levies a monthly penalty of 2%.

A Delhi-based lawyer, Rajiv Mishra, discussed the MCD regulation when he said, “Some municipal corporations first provide a show cause notice to recover the dues if someone fails to pay property tax on time. According to Sections 155 and 156 of the Delhi Municipal Corporation Act, 1957, if someone refuses to pay even after receiving notice, the authority may pursue recovery of the debt by attaching the debtor’s property, bank account, rent, and all movable assets; however, such actions are usually reserved for the most severe situations. Additionally, Mishra continued, “Willful default may result in harsh imprisonment for seven years and a fine.

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