What is House/Property Tax? Everything You Need to Know About It

Owning a house comes with several responsibilities, one of them being paying the house tax. House tax, which is also referred to as property tax, is the amount that homeowners need to pay once every year. The tax is assessed, imposed, and collected by the government operating at the city level, such as municipal corporations and panchayats. All individuals owning a residential property are required to pay the tax. The tax amount is a major source of income for the local government and is used to provide better public facilities and amenities to the citizens. Read on to learn more about the various aspects of house tax. 

Factors Impacting The Calculation of House Tax

Municipal corporations across India use different methods to calculate house tax. Hence, it is not surprising that the tax varies across states and even localities under the same municipal corporation. However, the important thing to understand here is that the key factors used to calculate the house tax are common across all states. These factors play a critical role in determining the market value of the house, which forms the basis for tax calculations. These factors include the following.

• Location of the house
• Whether the property is used by owners or put on rent
• Whether the house is an old construction or a new one
• The size of the property in terms of the number of stories.
• The floor space index
• The overall carpet square area of the property

How The House Tax Is Calculated

There is no single way used by municipal corporations of different states for calculating the amount of house tax. The three main methods used for making this calculation include the following.

Annual Rental Value System (ARVS)/ Rateable Value System (RVS)

Using this method, the house tax is calculated by factoring in the average monthly rent that a house is expected to generate based on its size, location, and condition. 

Unit Area Value System (UAVS)

In this method, the house tax is calculated based on per sq ft per month for a specific location and multiplied by a set rate. Per unit price is assigned to the houses in each locality by the municipalities. This is based on their built-up area. The rate, in turn, is decided according to the location, type of construction, and usage of the house.  

Capital Value System (CVS)

This is perhaps the most straightforward method used for calculating the house tax as it relies on the market value of the house as evaluated and published by the municipal corporation. The market value is reevaluated annually to ensure its relevance and accurate tax calculation.  

Options For Paying House Tax

To enhance convenience for people, the government allows homeowners to pay the house tax both offline and online. Both these methods are explained briefly as follows.

Offline Payment

To pay the house tax offline, homeowners need to visit the local municipal office. These offices often have dedicated counters to accept house tax payments to minimise the wastage of time for homeowners. They accept house tax payments offline. Once the tax has been paid, homeowners should make sure to collect the receipt for the same for any future reference.

Online Payment

With the advent of digitisation, the government has facilitated the payment of house tax online. For this, the homeowners need to visit the website of their local municipal corporation and navigate to the appropriate section. Once there, they need to enter the information sought carefully and accurately before proceeding to make the payment. Paying house tax through this method is extremely easy and convenient, as homeowners can do so at any time and from any place. 

Steps To Follow For Paying House Tax Online

People planning to pay their house tax online should follow the steps given below to keep the process simple and hassle-free. 

• Start by visiting the municipality’s official website and create a login account using your basic information. And in case you have an existing account, you simply sign in.
• Once you have signed in, click on the property tax tab if it is present in the menu bar. Else, you can search for it under the taxes section.
• Next, select the appropriate property tax application form on the website and fill in the details about your house correctly, including its exact location, type, size, etc.
• Choose the proper assessment year to learn about any taxes due against the house. It is advisable to select the current and previous years for assessment to get accurate details.
• Now fill in the other details sought about the house, including the name of the owner, the name of the house, if any, and the identification number of the house.
• Next, select a preferred payment option and use it to pay the tax amount and finish the process of paying house tax online.

Conclusion 

Homeowners need to understand how property tax is calculated and how it affects their finances. By staying informed about property tax laws and regulations, homeowners can make informed decisions about their property ownership and tax obligations.