- Date : 24/03/2022
- Read: 4 mins
- Read in हिंदी: मुंबई वासियों के लिए प्रॉपर्टी टैक्स पर छूट
Not paying property tax can land you in trouble. It's an offence and translates to breaking the law set by government authorities, bringing some legal consequences.
The recent announcement by the Municipal Corporation of Mumbai, popularly known as BMC, has shed light on the long due history of property taxes. It was a relief for many people to hear the waiver of 100% property tax; the only condition to fall under the waiver is that your house should not measure more than 500 square feet carpet area.
If you live in a house that measures up to 500 square feet carpet area, you get a 100% waiver on your property tax. About 1.5 million people will benefit from this announcement. This announcement was made in the BMC's annual budget for the year 2022-2023. However, there are a few things to know about property tax. Let's discuss them in detail in this article.
1. What is property tax, and why it is collected?
Property tax is a form of tax that is collected by local municipal corporations for the maintenance of roads, sewer systems and to maintain the basic aspects of the city.
Property tax is not the same for every region. It is different for different cities. It mainly differs due to the rate of properties in that area. It also depends on the road associated with the property and the property's age.
Also Read: How to pay property tax online | Tomorrowmakers
2. Methods for the Calculation of the property tax:
The capital value system is the method used to calculate property tax in Mumbai. In this method, the tax is calculated according to the market value of the associated property. The rate of the property differs according to its type too. Residential property's market value will be different from commercial property's value.
The municipal corporation of Nagpur follows the system of Unit Area System. The annual value of the property has multiplied the rate of tax, and the final amount of property tax is billed accordingly. Delhi follows the same, but there's a special concession for senior citizens in Delhi. There's a 30% waiver for senior citizens, Ex-army officers, and physically challenged people.
The municipal corporation of Chennai follows the method of the Annual rental value system. The tax depends on the facilities nearby the property, the area it belongs to, and the amenities provided by the government in that area.
The collection of property tax also differs from region to region. In some places, it's collected half-yearly, and in some regions, it's collected yearly.
Also Read: Tax implication on jointly owned property
3. What happens when you don't pay property tax?
Not paying property tax can get you in some trouble. It's considered an offence and breaking of the rule and regulations set by government authorities, bringing some legal consequences. If your property tax is due for a long time, the first thing that happens is that a penalty charge is added to the outstanding amount. If you still keep it due, there's an interest amount that is added to it, and it keeps on getting added until you pay the dues. The corporation can also issue auction notices in extreme cases.
The municipal corporation can also issue a warrant of distress and may sell the movable items to recover the relevant amount. The corporation can also sell the property, and transfer of the property to any other party during this time is restricted. You cannot sell your property unless you have cleared the tax dues. Even banks don't sanction loans unless you submit the latest property tax receipt, which is the proof of tax paid to the government.
So if your house measures more than 500 square ft and you don't want to lose your property or pay extra penalty charges and interest, you should pay the property tax to avoid any further trouble it might cause.
Also Read: Selling your property? Use these strategies to get the best price for your property.
The recent announcement by the Municipal Corporation of Mumbai, popularly known as BMC, has shed light on the long due history of property taxes. It was a relief for many people to hear the waiver of 100% property tax; the only condition to fall under the waiver is that your house should not measure more than 500 square feet carpet area.
If you live in a house that measures up to 500 square feet carpet area, you get a 100% waiver on your property tax. About 1.5 million people will benefit from this announcement. This announcement was made in the BMC's annual budget for the year 2022-2023. However, there are a few things to know about property tax. Let's discuss them in detail in this article.
1. What is property tax, and why it is collected?
Property tax is a form of tax that is collected by local municipal corporations for the maintenance of roads, sewer systems and to maintain the basic aspects of the city.
Property tax is not the same for every region. It is different for different cities. It mainly differs due to the rate of properties in that area. It also depends on the road associated with the property and the property's age.
Also Read: How to pay property tax online | Tomorrowmakers
2. Methods for the Calculation of the property tax:
The capital value system is the method used to calculate property tax in Mumbai. In this method, the tax is calculated according to the market value of the associated property. The rate of the property differs according to its type too. Residential property's market value will be different from commercial property's value.
The municipal corporation of Nagpur follows the system of Unit Area System. The annual value of the property has multiplied the rate of tax, and the final amount of property tax is billed accordingly. Delhi follows the same, but there's a special concession for senior citizens in Delhi. There's a 30% waiver for senior citizens, Ex-army officers, and physically challenged people.
The municipal corporation of Chennai follows the method of the Annual rental value system. The tax depends on the facilities nearby the property, the area it belongs to, and the amenities provided by the government in that area.
The collection of property tax also differs from region to region. In some places, it's collected half-yearly, and in some regions, it's collected yearly.
Also Read: Tax implication on jointly owned property
3. What happens when you don't pay property tax?
Not paying property tax can get you in some trouble. It's considered an offence and breaking of the rule and regulations set by government authorities, bringing some legal consequences. If your property tax is due for a long time, the first thing that happens is that a penalty charge is added to the outstanding amount. If you still keep it due, there's an interest amount that is added to it, and it keeps on getting added until you pay the dues. The corporation can also issue auction notices in extreme cases.
The municipal corporation can also issue a warrant of distress and may sell the movable items to recover the relevant amount. The corporation can also sell the property, and transfer of the property to any other party during this time is restricted. You cannot sell your property unless you have cleared the tax dues. Even banks don't sanction loans unless you submit the latest property tax receipt, which is the proof of tax paid to the government.
So if your house measures more than 500 square ft and you don't want to lose your property or pay extra penalty charges and interest, you should pay the property tax to avoid any further trouble it might cause.
Also Read: Selling your property? Use these strategies to get the best price for your property.
