What is Property Tax or Municipal Tax?

Property Tax or Municipal Tax?

Property tax is a charge that the owner of land will have to pay every year. However, the property tax amount varies from one location to another. It could be paid either to the local state government or Municipal Corporation, as per the government policies. The property includes all tangible real estate property, house, office building and the property rented to others.

Types of Property:

Property in India has four categories, which help the government to estimate the tax on certain criteria. The divisions are mentioned below.

  • Land
  • Personal property –includes movable man made objects like cranes, cars or buses.
  • Intangible property
  • Buildings and godowns (Improvements in respect to land)

Present State of Property Tax:

Property tax in India is to be paid on “real property”, which includes land and improvements on land, with the government appraising the monetary value of each such property and assessing the tax in proportion to its value. Property Taxes/Municipal Taxes are charged on the municipal value of the building and land in the area, which can be paid either on an annual or semi-annual basis. Property tax varies from location to another and can be different in different cities and municipalities.

Paying your property tax

The easiest way to pay your property tax, is to pay it online, using internet banking, debit or credit card.

Each state or municipal corporation has its own website for online payment of property tax, these sites require the assesse to furnish their Property Tax number or Property ID or Khatha number or the revenue survey number.

How to Pay Property Tax Online:

Paying property tax was considered a huge hassle in the past, but nowadays many municipal corporations gives the option of paying property tax online, streamlining the process and saving valuable time.

For Example: Delhi Property Tax

  • Go to http://www.mcdonline.gov.in/ portal. You can select from the following three links, as per your area’s municipal corporation on MCD’s website:

South Delhi Municipal Corporation i.e. (SDMC)
North Delhi Municipal Corporation i.e. (NDMC)
East Delhi Municipal Corporation i.e. (EDMC)

The area that fall under the above three municipal corporations, are listed on each of the south, north and east municipal corporations’ websites

  • Select the option “Property Tax”
  • Enter your “Property ID” and File Property Tax for the relevant financial year.

Individuals who wish to pay their Property Tax Online need to follow the following steps:

I. Go on the official website of your municipality/city corporation.
II. Select the option indicating property tax and navigate to the payment option.
III. Select the right form, based on the category under which an individual’s property falls.
IV. Select the assessment year (AY). This will be the year for which property tax needs to be calculated and paid. Most municipal corporations gives an option to clear backlogs in property tax payment.
V. Fill the details in respect of property identification number or Property ID and any other relevant document of the property including the owner’s name.
VI. Once all relevant information has been entered, individuals can choose the mode of payment, which could be credit/debit cards or internet banking.
VII. Once payment is made individuals can take a print out of the challan for their reference.

Note: These are some basic steps involved in paying property tax online and could vary depending on the city/town corporation.

Tax Deductions against Income from Property
Municipal Taxes are charged on the municipal value of the building and land in the area. If Municipal Taxes are paid by the Landlord on or before 31st March of financial year, then such taxes paid will be allowed to be reduced from GAV.

Mr. Kunal is the owner of a flat which has a municipal value of Rs.50,000 pm. The Flat is let out at Rs.60,000 pm. Municipal taxes paid for the flat is Rs.70,000. Interest paid on home loan is Rs.50,000. Calculate Income from House Property?

ParticularsAmount (Rs)
Gross Annual Value (GAV)7,20,000
Less: Municipal Tax/ Property Tax(70,000)
Net Annual Value (NAV)6,50,000
Less: Standard deduction u/s 24 (30% of NAV)(1,95,000)
Less: Interest on Home Loan u/s 24(b)(50,000)
Income Chargeable under "House Property"4,05,000

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