Not paying property tax on your house can have consequences for you. Recently, Brihanmumbai Municipal Corporation (BMC) announced that they will start seizing valuables belonging to property tax defaulters. “First, we are targeting commercial properties, then we will move to residential and individual properties. We will seize valuables, including furniture, from defaulters if they fail to pay their dues," the Indian Express quoted Sangita Hasnale, assistant municipal commissioner of BMC’s assessment and collection department, as saying on 20 February. We tell you what the property tax rate is and why it’s important to pay it.
Who needs to pay
Anyone who owns a property—apartment, commercial space or vacant land—needs to pay some money to the government authorities in form of property tax in lieu of basic civic facilities available in and around the property. However, certain categories of properties or owners are exempt from paying tax or are required to pay at a lower rate compared to others. For instance, agriculture land or properties used for worship are exempt from paying this tax.
The tax rate
Property tax is calculated based on various factors such as the locality, size, type and age of the property, its usage, the covered area, owner profile (age, gender, occupation or income) and so on.
Typically, it is calculated as a percentage of the annual rental value, capital value, or unit area value of the property. However, different municipal authorities follow different methods to evaluate a property. For instance, the Municipal Corporation of Delhi (MCD) has adopted the unit area system to calculate tax. You can calculate your property tax liability through calculators that are, typically, available on the municipal authority’s website.
How to pay
Property tax needs to be paid annually; some municipal authorities also allow paying it semi-annually. You can pay your property tax offline at the respective municipal office of your area or at the designated bank branches. You can also pay it online through website of the municipal authority.
Why you should pay
Remember that the property tax adds to the municipal funds, out of which salaries of municipal workers, such as those who sweep the road or maintain the sewage system of the area, are paid out.
Moreover, you will have to pay a penalty for late payment or default. Late payment can attract a fine in the form of interest on the amount due, depending on the policy of the respective authority. For instance, MCD charges 1% on the amount due per month, while Bruhat Bengaluru Mahanagara Palike charge 2% per month.
Again, the rules differ depending on the municipal corporation in question. Talking about the rule for MCD, Rajiv Mishra, a Delhi-based advocate, said, “If someone fails to pay property tax on time, some municipal corporations initially give a show cause notice to recover the dues. If someone fails to pay it even after the notice, the authority can recover the same under Sections 155 and 156 of the Delhi Municipal Corporation (DMC) Act, 1957, by way of attachment of property, bank account, rent and all movable properties, but such steps are typically taken in extreme cases". Wilful defaults may also attract rigorous imprisonment for a term of seven years and a fine, added Mishra.
It is important to note that the onus of paying property tax is on the owner, and not the occupant of the property. So make sure you pay the property tax on time.