Property Tax in India: Types, Calculation and Payment

• 28 Feb, 2025
• Published By MSanvi

Taxes play a major role in any state or country, which speeds up development work. If we talk about property tax among taxes, then it is the main source of revenue in India, which is imposed by the municipality. Generally, this property tax is imposed by MCD on everything from residential houses to commercial properties and industrial properties, which is used for public services and infrastructure development at the local level.

Types Of Properties in India

In India, property tax is calculated in four ways.

1. Land - This means land without construction, which can be a plot or agricultural land.
2. Moveable Property - Moveable property includes your car, bus, trucks, etc.
3. Immovable Property - includes your construction, i.e., houses, malls, apartments, and
   warehouses.
4. Intangible Property - This type of property includes your patents and copyrights.

What is Property Tax?

Property Tax is an annual tax imposed on real estate developers by local municipal authorities in India. Tax estimation is done based on the value of the property, which includes development or any improvement on the land. The survey and tax estimation are done by local government bodies, in which tax is applied according to factors like locality and its usage. However, taxes are usually levied on an annual or semi-annual basis; apart from this, they may vary depending on the location, city, and state.

The standard formula for calculating the property tax

Although the exact method of calculating property tax varies for different municipalities, there is a standard formula for calculating it:
Property Tax = Base value x Built up area x Category of use x Age factor x Type of building x Floor factor

Key Factors of Property Tax Calculation

There are many major factors in property tax calculation:
● Location - What is the location of the property? (urban area or rural area)
● Occupancy – Whether the property is owned or rented.
● Property Type - Property: Residential, Commercial, or Land.
● Amenities - That area should include parking spaces, parks, and gated colonies.
● Property Age - The age of the property, such as when it was built, whether it is a new
construction or an old construction.
● Types of Property - What is the structure of the property, such as multi-story, single-story,
independent building, etc.?
● Carpet Area - What is the net usable space in a flat or house?

Methods to Calculate Property Tax

Municipal authorities within India calculate property tax in three ways.

1. Unit Area Method - Property tax is based on the per unit price of any property, which depends on factors like location and resale value. This method is used in cities like Delhi, Bangalore, and Hyderabad.
2. Capital Value System - The calculation of any property tax is done according to the percentage of its market value, in which location is an important aspect. This method is used in Mumbai.
3. Rental Value System - In many cities, property tax is decided based on rental value, which includes factors like size, location, and amenities of the property.

MCD property tax exemption

There are some parameters to get relaxation in taxes in MCD.
1 - Vacant properties or those used as places of worship, heritage sites, public burial grounds,
or properties used for any charitable purpose.
2 - Property of persons martyred while on paramilitary/police duty.
3 - Agricultural land or buildings (except residential houses).
4 - Property owned by a gallantry award winner or war widow who is using the entire property
for self-residence.
5 - Players who have won awards in international sports.
6 - Property of any employee of South MCD who is completely handicapped.

Conclusion

Property tax in India varies according to states and cities but still plays a major role in municipal funding. If you want, you can make payments through both online and offline means. And you should discharge the responsibility of being an alert and efficient citizen of the country. If you need the help of a professional advisor, then M-SANVI REAL ESTATE PVT LTD in Uttam Nagar, Delhi, is a reputed and reliable company to help you.
Note: If you have any queries related to real estate properties such as 1BHK Flats, 2BHK Flats,
3BHK Flats, 4BHK Flats, Apartments, and Independent Houses in Dwarka Mor, Uttam Nagar, Delhi, you can contact M-SANVI REAL ESTATE PRIVATE LIMITED for your choice and demands.
Written by: ✒ Dwarika Mishra

M-Sanvi Real Estate

Author