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How to Pay House Tax Online – A complete Guide to Pay Property Tax

Tax payers can now pay their house tax online. The procedure is simple and easy. Here's a complete guide to help you pay your property tax online.

How to Pay House Tax Online: How to Pay House Tax OnlineHouse Tax can also be called Property Tax. This tax is collected by local governments instead of the central government.

Panchayats, Municipalities, Municipal Corporations, etc. are the ones who collect these taxes. They use this collected money to maintain roads, bridges, parks, fly-overs, sewage lines, public transport, public places, etc. 

Everyone who owns a piece of land or a house, or an office structure, is subjected to this tax. Even if these owned structures have been rented out, the owner has to pay the property tax on them every year. 

What is Property Tax or House Tax?

Property tax is something that all landowners have to pay every year. It is based on the entire value of the property you own. It is taken against all structures, residential as well as commercial. Vacant plots or lands that don’t have a structure or building built are exempted from this tax.

There are several ways in which the property tax can be calculated. Different small governments use different methods, whichever is convenient is to them, to calculate this tax. The most used methods are mentioned below.

How is the Property Tax calculated?

This is the basic formula that is used while calculating property tax:

Property Tax = Base Value (of the land) x Built-up Area x Age Factor (of the owner) x Type of Building x Category of Use x Floor Factor

Different methods of calculating Property Tax

  • Capital Value System (CVS)

When the property tax is calculated as a percentage of the market value of the property it is considered to be calculated under CVS. The market value of the property is decided by the government according to the locality the property is situated in.

Ex. Mumbai

  • Unit Area Value System (UAS)

Under UAS, the property tax is calculated as the based unit price of the area where the property is built. This unit price is decided based on the location, usage, and land price. The expected returns of the following are calculated and multiplied by the built-up area to determine the tax value. 

Ex. Patna, Delhi, Kolkata, etc.

  • Relatable Value System (RVS) a.k.a. Annual Rental Value System

According to the Annual Rental Value System, the rent that could be generated from the property in a year is calculated. It may not be the actual rent that is collected, it is the value that is generated had every single part of the property been rented. 

Ex. Chennai, some parts of Hyderabad, etc.

Details to collect before paying property tax

  • The annual value of your property
  • Property Classification (Residential/Commercial)
  • Zonal Classification
  • Property Dimensions
  • Built-up Area
  • No. of floors (Including basement)
  • Area of each floor
  • Electricity Bills
  • Exemptions, things against which you don’t have to pay property tax

How to Pay Property Tax Online

  1. Visit the website of your municipality or city corporation
  2. Click on “Property Tax”
  3. Scroll towards the “Make payment” option
  4. Choose the correct form based on the type of your property
  5. Choose the year for which you want to pay the property tax of
  6. Fill in the Property Identification Number and any other documents that are required
  7. Choose the mode of payment
  8. Once the payment is successful, you can download and print the challan

Interest Rate for Property Tax

If you fail to make a payment on time it attracts fines. These fines aren’t a specific number that needs to be paid, instead, these fines are charged off of the tax that you were supposed to pay, in the form of interest.

The interest rate at which your fine is charged against your property tax varies from state to state. However, it stays between the 5% to 20% bracket. Some states even choose to waive off these fines. 

Calculation of Income from a House Property

  • Only the net annual worth of the house is taken into consideration
  • If the house is staying empty for some time due to no tenants, then only the months that the house was occupied are taken into consideration instead of the full 12 months

Tax Deductions Against Income from Property

Section 24 of the Indian constitution states that “Income from the house property” is applicable when:

  • When you have rented the place out, the rent will be considered as an income
  • If you have more than one house, then all the houses except the one you live in will become a part of your account
  • The income from the property will be zero if you only have one house and you are living in it.

Exceptions

  • If the house you own is not occupied by you, then you can ask for an exemption from the interest generated without any limit.
  • If your house is not occupied by you because you live in a different town due to unemployment, then you can claim exemption up to ₹2 lakh.
  • There is no deduction on brokerage for a tenant or commission on a home loan.
  • If you have taken a home loan, then you have to complete the construction within 3 years. If you don’t then you will be allowed to withdraw only ₹30,000 instead of ₹2 lakh.
  • You must have the interest certificate on the loan you have taken.

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FAQs Related to How to Pay House Tax Online

Do I have to pay the property tax if I am a tenant?

No. Only the owner of a house has to pay the property tax.

Can I get an exemption from the property tax?

You can get an exemption on the property tax based on your age, net income, type/location of the property, etc. You would have to check the terms and conditions to be able to get an exemption on your municipality website.

Does the central government decide the Property Tax?

No. The Property Tax is collected by the local governments. Ex. Panchayats, Municipalities, Municipal Corporations, etc.

Can the property tax be more than the worth of my property?

No. the property tax can never be more than the actual worth of your property.

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