Property Tax 101 forChennai and Bengaluru
Under Indian Taxation Law, individuals who own property – residential or commercial, are expected to pay property tax within a fortnight of the commencement of the half-year. The manner of payment differs from city to city, and is determined by the respective States. Bangalore and Chennai are among thecities driving real estate infrastructure in southern India.RoofandFloor discusses how property tax is calculated in both cities.
Calculating Property Tax in Chennai
- Property tax in Chennai comes under the jurisdiction of the Chennai Municipal Corporation. As a first step, the prospective home buyer has to apply for assessing value of the property and to evaluate property tax. The application is raised by using a form available with the Office of the Revenue Officer, Office of the Assistant Revenue Officer or the Officer of the Zonal Offices. The application must be accompanied with copies of the title deed, the approved plan, receipt of tax last paid and where a lease exists, a no objection certificate from the landowner. Following this, the evaluation takes place.
- According to the Chennai City Municipal Corporation Act of 1919, the Reasonable Letting Value (RLV) or the Annual Rental Value is calculated.This helps determine amount payable as half-yearly property tax. The monthly rental value of the property is based on the basic rate per sq. ft. The amount arrived is then multiplied by 10.92 which is the annual value of theproperty. The half yearly property tax is 12.40% of this amount.Evaluation of property tax is also determined by the type of building. The Formula: Half yearly property tax = Plinth Area x Basic rate x 10.92 x 12.40%
- Some concessions are provided on Chennai property These include a 20% rebate on monthly rental value for semi-permanent buildings such as tiled, asbestos or thatched buildings; a 25% rebate on monthly rental value for residential buildings occupied by owners; and a 10% rebate on monthly rental value for non-residential buildings occupied by owners. A maximum of 25% rebate is allowed on buildings older than 4 years (1% for each year).
- Payments can be made online through the Chennai Corporationwebsite, or offlineat one of the walk-in counters set up at select banks. Tax collection through offline medium is done by the Electronic Clearing Scheme (ECS) and is semi-online in nature.
Calculating Property Tax in Bengaluru
- To calculate Property Tax in Bengaluru,a prospective home buyer must have certain information before beginning the process. Home owners must find out the Zone in which the apartment/flat is situated,total built up area of the apartment, total parking area allotted and year of construction of the apartment.
- Once this is determined, the applicant must use either Form IV or Form V. Form IV is relevant if the properties in Bangalore have not undergone further construction or modification in the past year or has not undergone a change in usage (self-occupied or tenanted), while Form V is relevant if the property has undergone construction or usage modifications in the past year. The BBMP Zonal Office handles collection of property tax.
- There is a penalty of 2% per month on total property tax payable if you are late to payment.
- Property tax is calculated on the Unit Area Value system, based on expected returns from property, depending on the location and usage of the property. Since the unit of calculation is based on per sq. ft. per month (UNIT) and for a particular location, street, (AREA) and multiplied by a rate (VALUE), this method of assessment of property is called “Unit Area Value” method.
- Payments can be made online through the Corporation’s website, or offline, at one of the walk-in counters at the BBMP Zonal Office, at one of the BBMP Citizens Service Centre and Bangalore One outlets.
Calculating property taxes,deciding on hiring property lawyers who canhelp understand the nuances and property valuation – all these require a lot of tightrope walking. RoofandFloor aims to make your home buying journey easier.
Article written by: Anita Kurup
Anita is a content professional for the past 15 years and has worked in both traditional and digital media. She transitioned to digital media early on in its advent in India. She will never say no to toddler-proof keyboards and caffeine.