No Property Registration without Property Tax

Narendra Kumar

04 Sep, 2019

To understand what property tax, one must first know about what all things are included in the word property? The property means and includes houses, office buildings and premises rented or owned to third parties.

Types of Property:

Property is divided into the following four categories:

1. Land in its most basic form, which means the land without any construction or improvement.
2. Any such Improvements made to land it include immovable man-made creations e.g. Buildings and Godowns.
3. Personal property -Man-made objects like cranes, cars or buses (Movable)
4. Intangible property

What is the Property Tax?

In layman language, it can be said the tax on the property as defined above. However in a practical sense in basically refers to the tax to be paid on the “real property”, wherein the government defines the monetary value to such property and basis which the property tax is calculated, which is required to be paid annually or as the case may be. The tax to be paid varies from state to state.

Where this amount Collected in the form of Property Tax goes?

The property tax so collected by the corporation is used to develop local amenities including road repairs, maintenance of parks and public schools, etc.

Recently in Gurugram the MCG (Municipal Corporation of the Gurugram) has issued a notification informing that the properties having taxes pending shall not be allowed to get such properties registered. In order to ensure the strict adherence to the same, the MCG has made its official to be at the property registration office and ensure that no property is registered without property tax being paid. It has informed the same to the Tehsil office also that no property should be registered without the NOC being obtained from Corporation with respect to the payment of the Property tax is it land, building, or such other property even includes resale.

The corporation has even provided a facility for, then and their payment for the taxes at the Property registration office by submission of the demand draft for pending taxes.

However, this has drastically enhanced the collection of the Property tax in December 2017 it was recorded as 378.29 crores and it is 114% of the previous year collection.

Taxation related to House Property:

Tax Deductions are allowed under section 24 of the IT act against Income from Property.

Applicability of Section 24 of the Income-Tax Act is as follows:

1. On the rented house, then the rent received is considered as income.
2. In case of having one house: a considerable amount for the tax is NIL. However, any income derived from rent and the annual value of additional houses will be subject to tax after deductions made under Section 24

See our Recommendation: Property Registration in India.

Deductions under Section 24

There basically two Kinds of deductions under Section 24 of the Income Tax Act:

1. Standard deduction: A sum equal to 30% of the net annual value does not come under the tax limit.
2. Interest on loan: when a house is purchased on loan or loan has been taken for construction or renovation of the house, whatever interest required to be paid on the principal amount of the loan is exempted from tax payment

How to Pay Tax Online?

Most of the municipal corporations^[1] nowadays provide the option of paying tax online, streamlining the process and saving valuable time. Gone are the days when it was considered as the hectic and lengthy process.

Following are the Steps to pay Property Tax Online:

1. Official website of respective state/city municipality/city Corporation is to be logged
2. Go to the property tax tab and look for the payment option.
3. Select the category under which an individual’s property falls.
4. Select the assessment year for which tax needs to be calculated and paid. In most of the sites, the very common site is in the name of clear backlogs in tax payment.
5. The applicant is required to fill in the property identification number and any other information of document details pertaining to their property and it usually includes the owner’s name.
6. After entering the information, the mode of payment is to be selected which could be credit/debit cards or internet banking.
7. After the payment is made, take a print out of the challan for future reference.

However, these steps may vary from state to state.

For information related  to Property Tax visit us at Enterslice

Also, Read: No Property Registration without Property Tax.