Term of the Day: Property Tax

A property tax is a levy on property that the owner is required to pay to the governing authority of the jurisdiction in which the property is located.

 

Property tax is the principal source of revenue of urban local bodies/local municipal authorities to upkeep the basic civic services in the city. it may be paid to a national government, a federal state, a county or geographical region, or a municipality.

 

There are generally three ways to calculate property tax such as Annual Rental Value, Capital Value System, Unit Area System. Property consists of three entities such as (a) Land (b) Improvements to Land (immovable man made things) and (c) Personalty (movable man made things) . The rate structure is flat on rural (panchayat) properties, but in the urban (municipal) areas it is mildly progressive.

 

All buildings and lands unless exempted under the statutes are liable to property taxVacant land is generally exempt. Central government properties are exempt. Instead a 'service charge' is permissible under executive order. Properties of foreign missions also enjoy tax exemption without an insistence for reciprocity. 

 

Paying property tax on time is important to avoid legal hassles and avail tax benefits. It is paid on a year to year basis.