What is Property or House Tax? Property Unique Id | PTR Guidelines | Exemptions | Valuation

Hey guys, welcome back to our new blog which is very useful for those who want to learn about the Property/ House Tax. Have you ever wondered why we should pay property tax to the government and the main purpose of collecting the tax? The state government has created a body called “Municipal Corporation” for every state district. This authorized body is also responsible for collecting the property Tax from the residents (Property Owners). In this post, you will get every piece of information about the Property and House tax with PTR Guidelines, Valuation, Exemptions, and Property Unique ID. Keep on reading this article ahead.

What is Property or House Tax?

In this section, we have provided comprehensive information on the Property or House Tax. Generally, the Property Tax is an ad valorem tax on the value of a property. The Tax rate can expressed as a percentage or per mile, also called millage. Property tax is also called House tax and holding tax. This Tax is charged by the government authority of the jurisdiction where the property is located. It can be collected by the level of national government, a federated state, a county or other geographical region, or a municipality. Even myriad types of jurisdictions can be charged the tax on the same property.

On real estate, there is frequently a property tax. It might be levied every year or when there’s a real estate transaction, like with real estate transfer tax. This tax may be compared to other levies such as the land value tax, which is based on the value of the land only and does not include the value of buildings and other improvements, and the rent tax, which is based on rental revenue or imputed rent. A property tax system levies taxes in proportion to each property’s monetary worth, which is determined by the government through appraisal or other means. Below check the PTR Guidelines for Property/ House Taxes and other related details.

Property Tax in India: Everything you Need to Know

What is the purpose of Property Tax in India?

So property tax and house tax are primary sources of revenue for local municipal bodies or urban local bodies. The money raised by property taxes goes toward building and maintaining the community’s infrastructure and public facilities. The major reason for collecting property tax funds from the public is Public Services and utilities. Essential public services and utilities including trash management, street lighting, sanitation, and water supply are funded by property tax revenue. The community’s general well-being and standard of living are enhanced by these services.

Property Unique ID for Property/ House Tax

As you know, in every state of India people can easily file Property or House tax online. But make sure guys, you know your property’s Unique ID for payment of tax and check the details about the property. Still, most of them don’t know about the Property Unique ID. The property has a 15-digit unique property identification code or UPIC and right now the government has initiated to circulate the unique numbers that identify municipal access services. Every owner who owns more than one property will receive a separate UPIC Card, thus each property they own will have its own card.

Property or House Tax Exemptions in India

The Indian Constitution Under section 24 has defined property tax Exemptions in India. Here we have shared the point-wise details of Exemptions and you must read all the points very carefully. Following cases where they can be exempted:-

  1. In the case when property owners do not reside in the house they have taken a loan for it. Moreover, they can be exempted from the entire interest with no upper limit on the exemption.
  2. There are no deductions on brokerage or commissions for arranging loans or tenants for the house owners
  3. Another one is when the house owners do not reside in the property/house just because of employment or business. If they have purchased or rented a house there, they can claim an exemption on the interest but only up to Rs. 2 lakh.
  4. For homeowners to be eligible for the maximum deduction of Rs. 2 lakh, the building of their homes must be finished within three years of taking out the loan. They are only eligible for an INR 30,000 exemption if they are unable to finish the building within three years.
  5. When calculating their tax deductions, homeowners should keep the interest certificates for any loans they have taken out on hand to serve as documentation of the loan.

Valuation of Property Tax

In India, the location of a property determines the property tax, which varies from state to state. Various municipal companies compute taxes in different ways. If you want to check out the perfect value of property or house then you need to do the Calculation of Property Tax. Here we have provided the perfect way to calculate the valuation of property Tax. Generally, the formula used for calculating property tax is:-

Property tax = base value × built-up area × Age factor × type of building × category of use × floor factor.

Other Methods of Valuation of Property Tax

Commonly, the municipal corporation uses the following three methods for the calculation of property tax:-

  • Capital Value System (CVS):- Under CVS, the property tax is determined as a percentage, according to the location, of the property’s market value. Mumbai uses this approach for evaluating property taxes.
  • Unit Area Value System (UAS):- Under this approach, the property value is initially established by the Indian local authorities based on factors such as usage, land price, and location. To obtain the real tax value, multiply this sum by the built-up area. Cities including Bengaluru, Delhi, Hyderabad, Pune, and Kolkata use this system.
  • Annual Rental Value System or Ratable Value System (RVS):- The property’s rental value is initially determined under the Annual Rental Value approach by taking into account the property’s condition, size, and location in addition to its accessibility to landmarks and other facilities. Lastly, the rental value of the property is used to compute the amount of tax due. Chennai and a few areas of Hyderabad use this method.

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