Home Taxation What is Property Tax & How to Pay Property Tax Online
What is Property Tax & How to Pay Property Tax Online

What is Property Tax & How to Pay Property Tax Online

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Property Tax and Payment of Tax Online

Property tax is the term used to describe the tax assessed on land and structures which are 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 take a close look at Tamil Nadu’s property tax laws and try understanding the same to be come an informed and improved citizen of the country.

What is Property Tax?

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

The municipality or government uses the revenue from the collection of property taxes to fix roads, building of schools or colleges or other structures, and to uplift and maintain sanitary conditions of the people of the state majorly. 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 neighborhood 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 in accordance with 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 is to be cared while filling the Self Declaration Forms?

You may quickly get self-declaration forms from the Corporation website. The applicant can acquire the application form from the relevant zonal office in areas where residents might not be able to 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 home owner’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 they haven’t already.

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

Details which are required or basic for property tax payment

For paying the property tax and filing the same, certain basic details shall be required by the authority and the tax payer 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
  • Year in which the building was constructed
  • Floor area of such building or property even if it is non-residential or residential and permanent or semi-permanent.

Processing of the Application

how to check property tax online? The home owner 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 basically 5 easy steps which are outlined and explained below:

  • Basic Value Determination

The rental yield per square foot of residential properties each month is the fundamental value. 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 the conversion of newly constructed residential (RCC) structures measuring 1000 square feet into a rental value per square foot have been provided in order to estimate the fundamental value.

  • Depreciation of Property

The reduction in annual value of the property shall be made based on the number of years the building existed or simply saying the age of such buildings. Based on this 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 which are existing for or older than 20 years – A 20% depreciation shall be applied.
  • Occupation of Building or Property

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

  • 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 are having thatched roofs are eligible for a discount at the rate of 50%.
  • Tile, GA, AC sheet, etc. which 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 in order 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 residential structures that are rented.
  • 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 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 property, whether it be an apartment, a business building, or a piece of land, must pay property taxes to the government in order to use the fundamental public services that are 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 agricultural is free from this tax. The same is true for property owners who are veterans, women, older citizens, or disabled, among other groups. In order to accurately determine your tax due, verify the rate and the rules.

Keep in mind 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 tariff is determined by the relevant authorities. 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 named 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 a term of seven years and a fine.

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