The Latest Municipal Policy On Property Taxes

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By CA, Vimal Punmiya

Property tax is that an owner is required to pay on the value of the property being taxed. Property tax can be defined as “generally, tax imposed by municipalities upon owners of property within their jurisdiction based on the value of such property.” There are three species or types of property: Land, Improvements to Land (immovable manmade objects; i.e., buildings), and Personal (movable manmade objects). Real estate, real property or realty is all terms for the combination of land and improvements. The taxing authority requires and/or performs an appraisal of the monetary value of the property, and tax is assessed in proportion to that value. Forms of property tax used vary between countries and jurisdiction. The tax power is vested in the states and it is delegated by law to the local bodies, specifying the valuation method, rate band, and collection procedures. The tax base is the annual ratable value (ARV) or area-based rating. Owner-occupied and other properties not producing rent are assessed on cost and then converted into ARV by applying a percentage of cost, usually six percent. Vacant land is generally exempt. Central government properties of foreign missions also enjoy tax exemption without an insistence for reciprocity. The tax is usually accompanied by a number of service taxes, e.g., water tax, drainage tax conservancy (sanitation) tax, lighting tax, all using the same tax base. The rate structure is flat on rural (panchayat) properties, but in the urban (municipal) areas it is mildly progressive with about 80% of assessments falling in the first two slabs. By all accounts, the property tax is under-utilized in the municipalities and not effectively used in the panchayats, mainly due to tax payer resistance.

For income tax purpose in India, property is considered as a source of income and hence, tax is levied on that. Under the Income Tax Act, incomes from the properties are regarded as one of the heads of income. The amount of tax is calculated on the value of the property being taxed.

It is the local municipality authority that levies property tax for the maintenance of basic civic services in the city. Unlike the countries like UK where the occupier is liable to pay the property tax, it is the liability of the property owner to pay the property tax India to the concerned municipalities.





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20 thoughts on “The Latest Municipal Policy On Property Taxes

  1. hi.thank you for a very informative article. my comment/query is what was the old system of property tax calculation for commercial property in Delhi? I am informed by an MCD official that my architect’s office (32.5m2) built in 2000 that I took possession in 2003 has a tax liability of around Rs 4,200/- by the unit area method 2004 onwards, but has a property tax of 20,000/- per annum as per the old method. so I am liable to pay 60,000/- tax from 2000 to 2003 + 118% penalty + 30% penalty. while all this while I am reading how people were paying LESS tax prior to 2004. can you throw some light on this issue?

  2. To,
    Vimal Punmiya,
    Your article on the latest municipal policy on property taxes was studious, informative and detailed. I myself have self-occupied property in central Mumbai. But i do not pay income tax,as my net income doesn’t exceed taxable limits. Then why should i pay hefty property tax to Mumbai municipal corporation. There are so many people like me, who don’t come under the purview of income tax.
    So it is better for Mumbai municipal corporation not to change current annual rateable value system and to turn to the new capital value based property tax system.
    Thanks,
    V..M.Dhamnekar

  3. Thanks or the lovely article, Request you if you can share roughly how much will be the additional TAX charged to Flats with more than 500 sq feet

  4. Sir, this is useful to my theses first thanks a lot for releasing such informative article.
    property tax should be on properties based on the income of the owner of the property. why because in indian scenario, low income people owned huge bungalows and palaces which are ancestor properties. even new houses also getting property is a one time investment but payment of property tax is annually/ incremental.

    please suggest

  5. We have one residential unit (Double storied) left by my father who paid to Delhi Municipality ten times of the municpality annual tax and was told under the scheme that now property is exempted from Mucnipality tax provided no alteration or addition is made and if it is self occupied Very recently One Mucipality fellow came and said such law has been revoked and such we are liable to municpality tax which so far was exempted throughout life. My question is whether munipality can revoke such exemptions. Whether exemtpiton continues even if the main owner has died and passes his property to his next ancestory viz wife and children and it is being occcupied by them

  6. Sir, On the approved residential building the property tax is to be levied on the property basis. But the GHMC is clubbing commercial tax to the residential flats permitting the occupiers to use for commercial which is contrary to their building approved rules.It felicitates tenants to miss-use the residential flats and penalize the owners.This is contrary to the building regulations.Use of the premises choice can not be left to the occupiers. Every occupier should use the building as per the building approval.It is the high time that the authorities put an end to this illegal practice.

  7. Please inform if owners of the houses constructed in lal dora area like hauz rani ,khirki village ,begaum pur near malviya nagar new delhi-17 are liable to pay property tax to MCD and if so from which year .Awaiti g an early response.

  8. is this 500sqtf on carpet area of the flat.
    what if it is a superbuild up area mentioned in your agreement .
    how much does 840 super build up =? CARPET AREA.

  9. Sir
    I had agreement with builder regarding flat with completion certificate and we are residence of the flat currently
    But still builder is not register or transfer this flat to our name in Pune municipal corporation
    This flat shows at builder name and property tax also generates at his name
    Now we received notice from corporation to pay tax else they will sealed the flat
    I requested many times to builder but he has not done and many times builder said this is minor will see

    Please suggest how to proceed on the same

  10. My opinion for Maharashtra gov Pune due to triple tax lots of people still not given there tax . and they show tin wla house and they pay single amount . but if gov directly apply single tax to everyone than differently they got huge tax from public. Due to triple tax people not coming frwrd to lay tax.

  11. Sir, i am in pondicherry Govt muncipality tax for vaccant land @ land value 0.1 % it means 1000 sq.ft Gl.r. value is Rs 1000 so the tax for vaccant land is 10,000 but it was building menas they collect below 10,000 how the is admissible the variation if any rule is there to collect vaccant land please inform union govt has power to levy tax

  12. Hi, My query is we have shop in Mumbai under paghdi system and we pay tax to our landloard every month. But, now landloard has informed us that there was hike in property tax in 2008 and now we are liable to pay him increased tax wef 2008.Since 2008 till date we pay 290rs tax per month but as per our landloard it is 900rs per month.Our office is approx 180 sq. feet.
    Kindly advice asap.

  13. Sir, This is sridhar residing at Kalyan [East] – Thane dist , we are paying the property tax on 580sqft to the KDMC approx Rs.19000/- but till now the builder is not been served the CC to us which we are paying the illeagle property tax [in KDMC language its SASTHY ] which is almost 4 to 5 times higher than the basic amount . Please advice did the Municipal corporation is eligible to take an action against the builder instead of putting builders burdon on the residents head or suggest the solution to come out from this issue upon which we building members can do from our side and live peacefully.

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