Property Tax: Influencing Factors and Calculation

• Property tax is simply the tax levied on a property, residential and commercial.
• Various factors like, property type, location, age, etc influence property tax in India. Thus, the tax value differs between different properties.
• Capital Value System, Unit Area Value System, and Annual Rental Value System or Rateable Value System are methods to calculate property tax in India.

Property tax is levied by the local bodies and is used to develop and maintain local amenities and infrastructure. Property owners need to know how this tax is determined. 
If you want to know what is property tax in India and how it is calculated, you are on the right blog. Covering the key property tax aspects, we will explore how this tax is assessed and delve deep into the factors influencing it.

Property tax is simply the tax levied on a property, residential and commercial. Its amount depends on the value of the property and other factors.You may have also observed differences in taxation for different properties. It is levied by the municipal authority having jurisdiction over the property. Factors Influencing Property Tax in India The value of property tax in India is a function of several factors. Let’s look into some of these key elements. Property Type Depending on the purpose a property serves, it is typically classified as residential, commercial, etc. Your property type is an important factor in determining property tax in India. The tax rate usually tends to be higher in the case of commercial properties. Property Location Typically, properties in urban areas attract higher tax rate. Every region has a different tax rate and the valuation method depends the approach adopted by the civic body. The official websites of municipal corporations generally have a property tax calculator. You can refer to it to know the amount of tax applicable in your case. Property Age The age of your property also plays a key role in determining property tax in India. Older properties normally have a lower tax rate than newer ones. If you are staying in a relatively new property, you can expect the rates to be on the higher side.

There are different ways of calculating property tax in India, as explained below. Capital Value System (CVS) The CVS method calculates tax as a percentage of the market value of the property. The market value depends on the locality of the property. Unit Area Value System (UAS) Here, the property tax is levied according to the per unit price of the built-up area. This price depends on various factors like property’s location, land price, and usage. Annual Rental Value System or Rateable Value System (RVS) The RVS method calculates the tax based on the rental value of the property which is determined basis the property’s proximity to landmarks, size, condition, and location among others.

As a property owner, you must know the applicable property tax and pay it on time to avoid issues related to non-compliance. Its timely payment is essential alongside other statutory payments like income tax, home loan EMIs, etc.Speaking of home loan EMIs, you can opt for a flexible repayment schedule that best suits your financial plan and helps manage your budget effectively. Also Read: Home Loan Process - Step-by-Step Procedure to Get a Home Loan