A property tax or house tax is an annual liability imposed on the landowner by the respective municipality. The collected tax is utilised to maintain civic properties such as streetlights, roads, drainage system and parks.
House tax or property tax is the annual amount you pay your municipal corporation or local government body in lieu of property and land you own. This municipal tax is collected every year or sometimes, biannually. By charging property tax, the government can tend to the upkeep of the area and fund services and amenities for the public.
Municipal tax bearers can pay the amount on a half-yearly or an annual basis, depending on their financial capacity. Though the liability seems a burden for some. However, timely property tax payment also offers suitable benefits.
Paying property tax is mandatory for residential and commercial property owners in India. The tax rate depends on the municipal corporation under which the concerned property belongs.
Reasons why timely tax payment is necessary
Individuals who own property such as commercial space, apartment or land needs to pay house tax to government authorities. Here are some reasons to pay property tax on time.
- Early benefits
Early taxpayers can receive tax payment discounts depending on the state governments. This is a facility offered to encourage timely payments. Individuals paying the tax amount before due dates can receive a handsome discount.
However, there are no fixed discount rates or offers on property tax payment as state governments extend different schemes. One can expect a 2% to 10% rebate depending on the current economic policy and current scheme.
- Avoid late payment penalty
Late tax payments bring many pitfalls like penalties. A late taxpayer is charged a late payment penalty after the due date. This penalty can rise from 5-20% based on the outstanding amount, property location and size. However, paying the tax before the due date helps in healthy savings.
- Income tax benefits
Individuals purchasing a new residence or property can gain tax benefits under Section 80C of the Income Tax Act. Payments made towards registration and stamp duty or related expenses involved in transferring property is compensated. Usually, individuals need NOC sanctioned by a municipal corporation for property registration or name transfer, increasing the chances of losing property tax benefits. However, Section 80C provides a decent solution.
Similarly, borrowers availing a mortgage loan to buy a house can also receive tax benefits. In this regard, knowing how to avail tax benefits on LAP becomes the primary task.
- Hassle-free payment
Unlike other tax payments, which involve complex equations, property tax is straightforward and efficient. With technological advancement, now individuals can pay property tax online with simple steps. Moreover, the tax amount is autogenerated by entering necessary details like land dimensions, type, area, etc.
How to pay property tax online?
A taxpayer can pay the dues online by following simple steps.
- Open the official website of concerned municipalities and select the property tax option.
- Select the correct form from the drop-down menu and choose the assessment year.
- Next, fill in the property tax or identification number and necessary details.
- Fill in the property identification number or property tax number, along with other essential details.
- Finally, select the preferred payment mode from debit, credit card, NEFT, or internet banking options.
After successful payment, a taxpayer would receive a house tax receipt or challan. This document is again crucial when applying for credit forms like a loan against property from HFCs.
Certain financial institutions provide pre-approved offers to streamline the borrowing process. Such offers are available on financial products such as home loans, LAP loan and others. Check your pre-approved offer by providing a few essential details such as name and contact number.
Since the property tax challan and ITR falls under the list of documents needed to apply for a loan against property, keeping them handy would be a smart decision.
Hence, to gain benefits such as discounts, exemptions and easy property loan approvals, individuals must practice timely tax payments. Lacking this quality can force them into hefty penalty payments and create a bad reputation in a lender’s eye.