How to Calculate Property Tax in India? A Simple Guide

Looking to pay Property Tax? Before heading out to the actual topic, let’s get to know more about the property tax in India, calculation methods, and more. Property Tax, sometimes referred to as the house tax is an amount that must be paid by the owner to the concerned municipal corporation or the local Government. The property owners must pay property tax every year. When you purchase a property from the owner, you must pay the amount at a time. But, property tax must be paid in specific amounts annually to maintain the ownership of that property. Usually, the government imposes a property tax on the property owners to utilize the amount for locality development, civic bodies, etc., in India. Wondering How to Calculate Property Tax in India? We explain the various methods of calculating property tax in India through this article. Read on!

Calculate Property Tax in India

What Is Property Tax

What Is Property Tax? Property Tax is an amount levied on the property owners by the corresponding municipal corporations for their properties. All the real estate property owners such as residential buildings, commercial buildings, offices, and houses must pay property tax every year. The Property Tax amount is calculated depending on various factors such as the dimensions of the property, construction type, property area, and others. 

The concerned state government collects the property tax amount from the property owners annually and uses the same for maintaining the localities, roads, sewage systems, sanitation, repairing parks, street lights, and a lot more. All the owners of immovable assets must and should pay property tax against their properties annually. 

Methods of Calculating Property Tax

In India, Property Tax is calculated using different methods. The Property Tax Calculation Formula may vary from one state to another state in India. However, the factors that are considered while calculating the property tax remain the same despite the calculation formula varies. The most basic factors such as the property type, location of the property, base value of the land, occupancy [self-owned or rented], age of the property, floor, size of the property, total number of floors, and more. There are three different methods to calculate property tax in India. Here, we have explained 3 Methods of Calculating Property Tax in India. Check it out!

Unit Area Value System (UAS)

Unit Area Value System is a type of system that calculates the property tax depending on the per unit price of the built-up area of the property. Per Unit Price is calculated based on the anticipated returns of the property i.e., the usage of the property, location, and the price of the land. Further, this value is multiplied by the built-up area of the property to obtain the tax valuation. Some of the major municipal authorities such as Hyderabad, Delhi, Kolkata, Bengaluru, and Patna access this method to calculate the property tax. 

Capital Value System (CVS)

Capital Value System is another method of calculating property tax in India. The city of Mumbai uses this valuation system to calculate property tax across various municipal corporations in Mumbai. As per this valuation system, the property tax is imposed on the property owners based on the percentage of the market value of the property. The corresponding state government decides the market value of the property depending on the locality of the property.

Annual Rental Value System or Rateable Value System (RVS)

The Annual Rental Value System is also referred to as the Rateable Value System. It is another method to calculate property tax in certain locations in India. The major localities of Hyderabad and Chennai access this method to calculate the property tax. Based on the rental value of the property, property tax is calculated using this method. However, it’s not the actual rent amount collected from the property. Still, it is just the valuation of the rent as determined by the municipal corporation. Further, the property tax is calculated depending on the location, size, and condition of the property.

These are the three different Methods of Calculating Property Tax in India. Each city or state in the country follows any of the methods to determine the property tax. 

Property Tax Calculation Formula

A specific formula is used to calculate the property tax in India considering various factors of the property. A Property Tax is not uniform across the country. It differs from the cities and states across the nation. Different municipal corporations have different methods to find property tax. However, there is only one Property Tax Calculation Formula to determine the property tax. Check it out!

Here’s the Property Tax Calculation Formula:

Property Tax = Base Value × Built-up Area × Age factor × Type of building × Category of use × Floor Factor.

Go through the list of factors that are considered at the time of calculating property tax in India.

  • Location of the Property
  • Type of Property (Commercial/Residential/Land)
  • Type of Construction (Single Floor/Multi-Storied/Kutcha or Pukka Structure)
  • Construction Year
  • Available Amenities: Car Parking, Rainwater Harvesting, and others
  • Occupancy Status of the Property: Self-Occupied or Rented Out
  • Floor Space Index
  • Square Area of the Property

There are different Types of Property Tax for which the tax amount is calculated by the respective municipal authorities in India. The Government of India has classified property types into 4 categories. One is personal property, land, intangible property, and developments done to the land. Based on the type of property, the tax amount is assessed in India. 

How to Calculate House Tax?

Want to know How to Calculate House Tax? Well, through this article, we have clearly explained the procedure to calculate house tax. Calculating the house tax is quite complicated. To simplify this computation, we have come up with a few simple points. Read on!

  • Various municipal authorities across various cities and states calculate the Net Annual Value of the house whilst calculating the house tax. Net Annual Value is deducting the municipal taxes paid against the property from the gross annual value of the house. For instance, when a property or house owner obtains Rs. 80000 as rent and pays Rs. 20000 as municipal tax then, the Net Annual Value of the house will be Rs. 60000. For this particular value, you must pay the house tax.
  • If the house remains vacant for a specific period in a financial year for any reason, you must consider only the income obtained as rent and it shouldn’t be calculated against the whole year. For instance, if a house receives Rs. 6000 per month as rent and remains vacant for about 3 months then, the gross value of the house will be Rs. 18000 [Rs. 6000 * 3]. The tax amount on this income is determined after deducting the municipal tax amount paid as well as the standard deduction of 30%.
  • Another case is that when the house remains vacant and the owner isn’t getting any sort of income through that and you’re still paying municipal tax then, in that case, you can offset or balance this loss against the income from other sources. It includes the salary or rent from any other property during the same financial year. In case, you can’t offset the loss in the same year then, you can carry forward the loss for up to 80 years.

How to Pay Property Tax Online?

Property owners can find Property Tax Calculator India on various official websites of the region-wise municipal corporations. Using the online calculator, individuals can easily assess their property tax amount. With the rapid advancement in technology and digitalization, in some cities, people have the facility to pay property taxes online. You need not wait in long queues at the municipal office to pay property tax every year. Just by sitting at home, you can pay the property tax. How to Pay Property Tax Online? Here’s the detailed procedure to pay property tax through the official website of the city-wise municipal corporation. Check it out!

  • First of all, visit the official website of the municipal corporation in your city. For instance, if you have a property or house in Hyderabad, visit the GHMC Property Tax official website.
  • After landing on the home page of the website, you can select the tab to pay the property tax.
  • You can find the option ‘Property Tax’ under the menu. Simply click on that option.
  • Navigate to the ‘Payments’ option.
  • Enter vital information in the property tax form. 
  • Select the property tax assessment year.
  • On the official website, individuals can find out the Property Tax Rate imposed for the delay in the payment.
  • Choose the mode of payment from the given options. You can select the Net banking, Debit, or Credit Cards option to pay your property tax.
  • Provide your net banking or debit or credit card details and finish the payment.
  • An electronic challan will be generated against your online property tax payment. 
  • Take a printout of the challan for further reference.
  • That’s all! These are the most basic steps that you come across while paying property tax online. However, the options may vary slightly depending on the state or location or the municipal corporation.

Well, this is all you need to understand about the procedure of How to Calculate Property Tax in India. Hopefully, this article has helped you in finding different methods to calculate property tax and pay property tax online. If you still have any doubts or queries regarding this article, drop them in the comments space. If you want to know more articles related to property tax calculation, banking-related posts, etc.

  1. 1. Which Properties Are Exempt From Property Taxation?

    The properties that are exempted from property taxation include non-profit organizations, religious organizations such as temples, mosques, churches, government buildings, central government properties, and more.

  2. 2. Are Online Tax Payments Functional For All Municipal Corporations?

    No, not all municipal corporations in India provide this facility for online property tax payments. However, few municipal corporations these days tend to embrace digital payments. Make sure you contact the concerned municipal authorities to find out whether the municipal corporation provides this facility or not.

  3. 3. For A House Property That Has Been Rented Out, Who Should Be Paying The Property Tax?

    The official owner of the property should pay the property tax for the house property that has been rented out.

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