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Property Tax in India

About Property tax

Property tax is the principal source of revenue of urban local bodies/local municipal authorities to upkeep the basic civic services in the city. And studies shows that the property tax base in developing countries especially like India, has been declining due to administrative and procedural inadequacies and lack of proper information regarding properties resulting a significant number of properties are not included in the tax base, those that are included are inaccurately assessed and collection is inefficient.

As MCD wishes to achieve the vision and objectives to provide transparent, accountable and efficient citizen-centric services to the citizens of Delhi through the use of Information Technology, Property Tax Division of MCD has initiated an innovative, broad based approach of Public-Private Partnership (PPP model).

Out of 3 ways (Annual Rental Value, Capital Value System, Unit Area System), MCD adopted Unit Area System which is recommended by Government of India.

How to calculate property taxes?

1)    Find out the assessed value of your property, including both the land and the building itself. This amount reflects the estimated value of your property as determined by the official tax assessor and not how much you paid for it, how much you personally benefit financially from it or how much you estimate it is worth. Add the estimated values for the land and the building together, and work with this number as the total estimated value for your property in order to calculate your property tax.

2)    Research the estimated property tax rates for the coming year. It may help to use previous year’s tax rates and their variances as a guide. Many local governments provide access about property tax rates, average home values and estimates for property taxes on their individual websites.

3)    Deduct any property tax exemptions that you qualify for from this total assessed value of your property. You may need to contact your local tax office to verify what deductions you are eligible to apply towards your property tax, as these tax exemptions vary by location. Common examples of people eligible for property tax exemptions are the disabled, the elderly over 65 years old and widows.

4)    Multiply your new amount for the assessed value of your property by the estimated property tax rate percentage for the coming year for each taxing district your property falls under separately. Add up the amounts for each taxing district to calculate the total estimated amount you will be required to pay in property taxes.

5)    Keep in mind that the amount you calculate is only an estimate and may vary significantly from the amount of property taxes you are required to pay. Official tax rates are not usually determined until the end of each fiscal year. To be safe, it is best to budget more than the estimated amount when planning to pay property taxes.