All You Need To Know About Property Tax
According to a 2019 Knight Frank report, more than half of the Indian population live in houses they own, as compared to just around 30% who live on rent. Owning a property in India has its perks but can also lead to increased expenses for the owner in the form of property tax.
What is a Property Tax?
If you own a real estate property anywhere in India, you are liable to pay taxes on the same. This property may be commercial or residential. It can also be a space that you are looking to rent out.
The local government collects this house tax from owners annually. As an owner, you must preserve such taxation receipts, as they may be necessary for the future. For instance, if you are looking to avail a loan against property, furnishing property tax receipts is mandatory for credit approval.
Although the amount of tax differs from one place to another, no location in India is entirely exempt from housing tax. How much you are liable to pay is determined using a formula by your local government.
Factors Affecting House Tax Levied On Your Property
The government charges property tax based on the following factors.
- Size and location of your property.
- Female owners are eligible for tax benefits.
- Senior citizen owners are also eligible for tax exemptions.
- Under-construction properties net lower taxes for their owners.
- A number of facilities provided in the locality or within the premises of the residential setup.
Why Should You Always Pay Property Taxes?
Many individuals in India avoid paying housing taxes because they feel that it is an added hassle that provides no benefit to owners. Take a look at some of the pointers below to understand why paying this tax is vital.
- Property tax receipts are vital documents that prove ownership in the event of ownership disputes. The name on the property’s tax receipts is often considered the legal owner of any house if other documents are inconclusive.
- If you are looking to sell a house, you would first need to clear outstanding tax payments linked to the property. Otherwise, a new name cannot be added to the deed of this house, thus disqualifying a buyer from legally owning the property.
- Property tax receipts are one of the vital documents needed to apply for a loan against property application. Without these records, no reputed financing company in India would offer you a mortgage loan against the property.
If the hassle of payment is your main concern, you have no reason to worry. Today, you can pay property tax online, enhancing the convenience and simplicity of the entire process.
Steps to Follow to Pay Property Tax Online
To make the tax payment process more accessible, the government has introduced a digital method. Follow the steps mentioned below for hassle-free tax payments.
- Step 1: Log in to the official government website, based on your city or municipality.
- Step 2: Select the land tax online payment tab, navigating to the payment option.
- Step 3: Choose either Form 4 or Form 5, based on whether any changes have been made to the property in question.
- Step 4: Choose the assessment year. This refers to the year for which you are currently paying taxes. Most online portals allow you to clear backlogs for previous years as well.
- Step 5: Fill up the property identification number along with other relevant details about your house. These details include property type, zone in which the house falls and others.
- Step 6: After entering all the details, choose your preferred mode of payment. Options available include debit/credit cards, internet banking, and more.
- Step 7: After the payment is complete, make sure to take a printout of the challan for future reference.
Properly paid taxes and requisite receipts are vital to avail to a mortgage loan such as a loan against property. You can refer to leading lenders for minimal documentation as well as attractive interest rates.
They also provide pre-approved offers to make availing such loans easier and faster. These offers are also available on a range of other financial products, such as credit cards, home loans, business loans, personal loans, and more. You can check your pre-approved offer by providing just your name and phone number.
If you are trying to clear house tax backlog for a loan against property application, you must first consider the simple eligibility criteria for LAPs. Moreover, picking a reputed lender is vital to enjoying a hassle-free loan against property process.
Regardless of whether you are seeking a loan against property at present, property tax payments are essential. Clear each year’s tax payments by the end of that financial year to avoid fines and penalties.