What is a Property Tax?

The tax collected by Municipal Corporations of the respective State from the owners of the property is the property tax. Method of calculation of tax varies from State to State. The funds collected out of this levy is utilised for the maintenance of basic amenities like roads, drainage, sewerage, etc.

What is a Property Tax Calculator?

Property Tax Calculator is a simple tool to calculate property tax online. The common factors that are required for calculating property tax are the base value of the property, the built-up area of the property, type of property, usage aspect of the property, age of the property, and occupancy aspect of the property. All these factors are embedded in the Property Tax Calculator and when the required details are selected, the formula applicable to the respective municipal corporation is applied and the tax calculated within no time. Where manual calculation would have taken ages to arrive at the property tax value, the same is done within minutes by this online tool.

How is Property Tax Calculated?

The tax on the property is assessed based on the location of the property. Property tax is different in different states. Municipal Corporations of the respective States have a different method of the computation of property tax. The general outline for the computation of property tax will not vary.

Initially the factors like the location of the property, the status of occupancy (whether it is for self-usage or it is let out), the property type (whether it is a residential property, commercial property, or vacant land), the facilities available (rain harvesting, car parking, etc.), age of the building, construction type (single floor/multiple floors, RCC, semi-RCC, or Kutcha), index of the space per floor, carpet-area of the building are considered and the property's assessment is done.

Once these factors are decided, the respective municipal corporation will by applying the formula to calculate the property tax that has to be paid.

The Municipal Corporation of Delhi applies the method as explained below for computation of property tax.

The factors required to calculate the property tax are the location of the property, area of the property that is built-up, the usage aspect of the property (residential or commercial), occupancy aspect of the property (residential or commercial), the age of the property, the type of structure (RCC, semi-RCC, or Kutcha). With these factors, the property tax value or the yearly value can be computed with a few taps using the Property Tax Calculator.

Municipal Corporation of Delhi has divided the entire Delhi City category wise and the categories are arranged alphabetically beginning with A and ending with H. So, under the factor location of the property, the category is determined based on the colony the property belongs to.

List of colonies that come under each category is as given below:

Category/Group List of Colonies under the Group

Group A

Friends Colony, Lodhi Road Institutional I P Estate (Press Area), Hudco Palace, Bhikaji Cama Place, Kalindi Colony, New Friends Colony, Panchshila Park, Shanthi Niketan, Sunder Nagar, Siri Fort Institutional Area, Pushpa Bhagwan, Maharani Bagh, Nehru Place, Mayfair Garden, West End, Vasant Vihar, Anand Niketan, Press Area, Pragati Maidan.

Group B

Balaji Estate, Andrews Ganj, Greater Kailash (I, II, III), Anand Lok, Hauz Khas, Gulmohar Park, JNU Campus, Hamdard Nagar, IIT Area, Kailash Colony, Nizamuddin East, Neeti Bagh, INA Colony, Kilokri, Lodhi Colony, Nauroji Nagar, Qutab Inst. Area, Navjivan Vihar, Sarvapriya Vihar, Safdarjang Enclave, Sarvodaya Enclave, Sukhdev Vihar, South Extension, Vasant Enclave, Panchasheel Enclave, Defence Colony, Green Park and Green Park Extension, Nehru Enclave.

Group C

Aruna Asif Road, Alkananda, Bhawani Kunj, Anupam Apartment, Central Market Lajpat Nagar,  Chittaranjan Park, Escort Area,Firoz shah Kotla Stadium, Kailash Kunj, East of Kailash, Panchsheel Vihar, Lajpat Nagar I, II,III, Munrika Vihar, Vasant Kunj, Malviya Nagar, Punjabi Bagh West, Nangal Dewat, Som Vihar.

Group D

Hudson Line, Gagan Vihar, Dwarka, Jasola Vihar, Jangpura A and Janpura Extension, Nanakpura, Mayur Vihar, Mohan Co-op Industrial Area, Karol Bagh, Mayur Vihar, Kirti Nagar, New Rajinder Nagar, Old Rajinder Nagar, Pushp Vihar, Rajouri Garden, Okhla Industrial Area, Pushp Vihar, Daryaganj, Indraprastha Extension, Anand Vihar.

Group E

Indian Airlines Colony, Cariappa Marg, Madhuban Enclave, IAAI Colony, Khirki Extension, Pahar Ganj, Press Colony, Pandav Naga, Mahavir Nagar, Rohioni, Tilak Nagar, Pant Nagar, Shahpur Jat, Chandni Chowk.

Group F

Arjun Nagar, Freedom Fighter Enclave, Dilshad Colony, Daya Basti, Anand Parbat, Hari Nagar, Okhla, Govindpuri, Ganesh Nagar, Madhur Vihar, Uttam Nagar, Majnu Ka Tila, Dishad Garden.

Group G

Tagore Garden, Ambedkar Nagar, Badarpur, Jahangirpuri, Dabri Extension, Amber Vihar, Dashinpuri, Dashrathpuri, Vivek Vihar Phase I, Harinagar Extension, Bijwasan.

Group H

Mandi Chhararpur, Maidan Garhi, Sultanpur Majra

Various choices under the factors that are required to calculate the property tax are given. You have to make your choice and thereafter the value of property tax will be given.

The factors with their choices are as given below:

  • Select the category of rebate among differently-abled, senior citizen, women, and none of the above.
  • Select the category of property among DDA/CGHS and others
  • Select the category of the colony as per the list given above among the categories A to H
  • Select the type of property among commercial, residential, and industrial property
  • Select the year when the property was constructed from the dropdown menu
  • Select the usage aspect of the property among residential, non-residential for public purpose, non-residential public utility, clubs, industry, entertainment, 2-star hotel, hotel with 3 star and above, hoardings, tower.
  • Select the type of structure among RCC, Semi-RCC, and Kutcha
  • Select the type of occupancy among rented, self-occupied
  • The property's unit area (built-up)

After making the proper choices tap on the submit button.

  • The property's annual value will be computed based on the choice of data
  • Tax to be paid in respect of the property will be calculated on the basis of the choice made by you.
  • Education Cess at 1% of the Annual Value will also be added to the property tax
  • The rebate pertaining to property belonging to differently-abled, senior citizens and women will be applied. This rebate is extended only if the property is used for self and is not let out. This rebate is restricted to 200 sq. mts. of the overall area covered or built-up. Residential flats of DDA/CGHS are not eligible for this rebate.
  • The rebate given is 20% of the property tax payable for an overall covered area of 200 sq. mts. If the property has more than one owner, the rebate is extended up to the individual share of each owner.
  • A rebate of 20% on the tax that has to be paid in respect of group housing flats will be given only where tax is paid till the 30th June of the FY. (b-d) will give the amount of tax on which this rebate will be calculated.
    • The property tax after all the rebates will be (b-d-e)
    • A rebate of 15% on the tax payable will be given if the amount is paid in a lump sum before the due date {rebate on value as per (f)}.
    • A rebate of 2% on the tax payable will be given if tax is paid online. Rebate will be on the value arrived after (f-g).

Property tax payable = (f-g-h)

Education cess at 1% on (f-g-h) = x

Total property tax payable = (f-g-h) + x

How to Compute Income from House Property?

Given below is the method to calculate income from house property:

  • The total of the rent collected for a financial year is the house property's Gross Annual Value (GAV). The Net Annual Value (NAV) of the house property is arrived at by deducting the property tax paid for the financial year from the GAV.
  • If the house has remained vacant for some part of the financial year, the rent collected for the months when it was let out only will be considered to arrive at the GAV of the property.
  • If you have multiple houses, then the rent from all the houses for the financial year will be considered to arrive at the GAV.
  • If you have a single house and you are residing in it then the GAV will be nil
  • If you have availed a housing loan, then the interest paid for the housing loan is eligible for deduction under Section 24 of the Income Tax Act.
  • The income from the house property is arrived at by deducting the standard deduction of 30% of the Net Annual Value and the interest paid on housing loan which is eligible for deduction under Section 24 of the Income Tax Act.
  • The income so arrived will be taxable as per the income tax slab you fit into
  • If you have not let out any property, then the deduction of Home Loan interest will lead to a loss in house income. This loss can be adjusted towards income sources like salary. This loss pertaining to a particular FY can be carried over for the next 8 years.

Tax Deductions Against Income from House Property

Income from house property is eligible for the following deductions under Section 24 of the Income Tax Act:

  • If you own a single property and you are residing in it, then there will be no income from the property.
  • On the contrary, if you have multiple houses and you have tenants for all the properties, then the overall rent collected for the financial year from each of the houses is the gross annual value of the houses. The property tax paid for all the houses will be deducted from the GAV to arrive at the Net Asset Value (NAV).
  • The NAV after all the eligible deductions under Section 24 of the Income Tax Act will be the income that will be subject to tax as per the income tax you fit into.

Deductions Permitted under Section 24

The income on house property owned in India is eligible for the following deductions under Section 24 of the Income Tax Act:

  1. Standard Deduction: A standard deduction to the extent of 30% of the NAV of the house property is allowed to be deducted from the NAV of the house property.
  2. House Loan Interest: The interest paid on the house loan is eligible for deduction from the NAV of the house property.

This category has 3 sub-clauses:

  • For a self-occupied house, the exemption is allowed only up to 2 Lakhs
  • The exemption is given on the interest paid on the house loan availed for the purchase or construction of the house even before acquiring the house or before completing the house construction. The deductions can be done in five equal instalments. If the loan is availed for reconstruction or renovation of a house, this exemption will not be extended.
  • If the loan is availed for renovation/reconstruction, then the exemption is available only after the completion of such renovation/reconstruction.

The following exemptions are given under Section 24 of the Income Tax Act:

  • If the house for which you have availed a loan is self-occupied, then the exemption is available for the entire interest that is paid on the housing loan. No maximum limit is fixed for this exemption.
  • If you are not occupying the house for which you have availed the loan, then there is an exemption to the extent of 2 Lakhs on the interest paid on the housing loan.
  • This exemption can be claimed only if the purchase/construction of the house you have availed the loan for is completed within 3 years. If it is not done within 3 years, then the exemption is available only to the extent of 30,000 on the interest paid on the housing loan.
  • Expenses incurred for utilising the services of a broker/agent to procure a tenant is not eligible for such exemptions.
  • An interest certificate from the financial institution has to be obtained to submit the same as a proof for having availed the exemption.

Deductions Permitted under Section 80C

You are eligible for deductions under Section 80C if you have purchased a new house. The stamp duty and registration charges amounting to around 10% of the total purchase cost is eligible for deduction under Section 80C of the Income Tax Act. You can also claim the deduction for the expenditure incurred while transferring the new residential property. But the overall eligible deduction under Section 80C is restricted to 1.50 Lakhs.

Tax on Capital Gains

If you sell a house property, the profit made on such a sale is the capital gains and this is subjected to tax, which is the Capital Gains Tax. However, if the profit made is invested in another property within two years from the date of sale, then it is exempted from tax.

Factors That Impact Your Property Tax

The factors that impact the property tax are:

  • The year of construction of the property
  • The structure of the building
  • The occupancy status of the house
  • The usage aspect of the property
  • The area that is built-up
  • The vacant area
  • The location of the property

FAQs on Property Tax

If a property is under dispute, who will have to pay the property tax?

The assigning officer has the authority to instruct one of the parties to pay the property tax. If the court order is in favour of the person who has paid the tax, it is fine. However, if it is against the person who has paid the tax, then the refund of the property tax can be claimed from the person in whose favour the judgement is given.

How to calculate property tax?

The onus of collecting property tax is assigned to Municipal Corporations of the respective State. The calculation of property tax varies from State to State. But generally, the property tax is the Rate of Tax x Property's Annual Value.

How is the income on house property computed?

If the house is given on rent, then the overall rent collected for the Financial Year is considered at the Gross Annual Value. The property tax paid on the house is deducted from the GAV to arrive at the Net Asset Value. The income from the house property is arrived at by deducting the deductions allowed under Section 24 of the Income Tax Act from the Net Asset Value.

What is a Property Tax Calculator?

Property Tax Calculator is an online tool for calculating the Property Tax. If all the factors considered for arriving at the tax along with the rebates allowed are provided, the calculator will instantly give the value of the property tax payable.

On the sale of the house property who has to pay the property tax?

The buyer has to pay the property tax from the date of purchase until the closure of the tax year. If the seller has made an advance payment of the tax for the financial year, then the buyer has to reimburse his/her share of the property tax for the financial year on a pro-rata basis.

In the perspective of property tax payment, who is considered as the deemed owner?

The person who becomes the implied owner of the property under the following circumstances is the deemed owner.

  • If the property is transferred to his/her spouse, children, etc., for a consideration which is not adequate, then such a person becomes the deemed owner.
  • If a person takes a house on lease for a period 12 years and above, then such a person becomes the deemed owner.
  • If the property is owned by more than one person, but the partition cannot happen legally, then the person who is the owner of such property is the deemed owner.
  • A member of a co-operative society, company, or any association has been allotted a property under any building scheme, then the member becomes the deemed owner.
  • A person to whom the property has been transferred under a contract and takes possession of the house is the deemed owner under the terms of Section 53A of the Transfer of Property Act 1882. In this case, the person has no title for the property but has only the possession of the property.

If a property is used for any other purpose other than for dwelling purpose, can it be considered as self-occupied?

The property can be considered as self-occupied only if the owner of the property resides in the house. Under the following circumstances, the property can be considered as self-occupied.

  • The property is not given on rent and there is no income from the house property
  • The owner of the property is not able to reside in the house as he is employed in a different place or has his business in a different place, and he is staying in a different property in that place which is not owned by him/her.

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