Everything you need to know about property taxes in India

Purchasing real estate property in India involves making several payments apart from the property value that you shell out. Unless you are informed about these charges or taxes, it’s easy to strain yourself financially. Whether you invest in residential or commercial real estate, it’s important to know these taxes. In India, property taxes constitute one of the largest sources for the government to stream revenue. Thus, owners need to pay property taxes annually.

In this article, we are going to discuss everything you should know about these taxes.

How does property tax work?

Property tax refers to an annual sum that the landlord or the property owner pays to the government. The value of commercial or residential property in Bangalore determines the tax amount. Based on the government policy, you need to pay this tax to the state government or the municipal corporation.

While calculating the tax amount, the following aspects are considered.

·         Property location

·         Property size

·         Whether you choose an under-construction or ready-to-move property

·         Gender of the property owner

·         Age of the property owner

·         Civic facilities around the area

Why is property tax levied?

The municipal body provides different services to property owners, against which they charge the property tax. These include power and water supply, cleaning the locality, maintaining roads, providing drainage facilities, and other civic amenities. Government bodies can stream a good source of revenue through property tax.

Failing to pay property tax might lead to the disconnection of your water line or initiate legal action.

The government determines property tax based on recent property valuations that the municipal body carries out. Only the residential or commercial property in Bangalore owner can pay this tax. So, if you are renting a property, you need not worry about paying taxes.

Why is it important to pay property tax?

Paying property tax is important for several reasons. If you face a dispute regarding the ownership of the property, the tax receipt can work in your favour. This way, you can prove the ownership of the property. However, when you purchase a real estate property, the municipality updates the property title in its records. However, you cannot transfer the name to new buyers unless all the outstanding arrears get cleared.

In case you are looking for a residential property for sale, it’s important to scrutinize the tax documents. Most buyers seek legal assistance to ensure that all the papers are clear. In case the record doesn’t get updated with the municipality, the tax receipt will continue to show the name of the previous owner.

When you register your new property at the local municipality, the authorities would request you to furnish relevant documents to prove that you own the property. This list of documents includes the sale deed copy, duly filled application, society clearance, and receipt of the last property tax that you paid. Besides, you would also need the property tax receipt when you apply for loans.

Considering all these priorities, it’s crucial to pay property tax on time and keep the receipts with you. Tax is mostly levied on both residential properties and commercial properties. However, certain establishments such as government buildings, places of worship, or foreign embassies are exempted from property tax. Besides, property tax doesn’t apply to clean land.

How to pay property tax?

Property owners can choose to pay their taxes both online or offline. Visit the municipal corporation in your city in person to pay the property tax physically. Also, you can pay the property tax online through the portal of your municipality.

Paying your property tax online ensures that you can keep a digital record of all your transactions. Therefore, it is recommended to pay the tax online. Simply register yourself with the corporation or municipality under which your property lies to avail the online payment facility.

Are there any exemptions on property tax?

Yes, there are some exemptions on property tax. These vary from state to state. Once you know these exemptions, you can apply for these benefits. In all the states, properties belonging to governments and religious organizations are not taxed.

Typically, this exemption is applicable to the following property types:

·         People with disabilities

·         Senior citizens

·         Owners working under defense services like the army or navy

·         Families of martyrs from the BSF, Indian Army, police service, fire brigade, and CRPF.

·         Agricultural Properties

·         Educational institutes

Now that you know why you need to pay property tax, you can confidently proceed to purchase your property. If you are looking for residential or commercial property for sale, scrutinize the tax documents carefully. This way, you can remain abreast of the current property ownership status. Seek professional assistance from property brokers in choosing your home if necessary.