Property tax is the amount that is paid by the landowner to the municipal corporation or the local government for his/her area. The tax must be paid every year. Property, office buildings, and residential homes that are rented out to third parties are considered real estate assets.
Property tax is charged by the government on all tangible real estate that an individual owns. These real estate assets could include residential homes, office buildings and premises rented out to third parties. It is also known as house tax.
Taxes are a government’s principal source of revenue, with the amount of money collected dictating the resources accessible to residents. Every property is a taxable asset, and the property tax is an annual sum paid to the government by the property/landowner. Depending on government policy, this tax could be paid to the local state government or the Municipal Corporation.
In this sense, “property” refers to any physical real estate under an individual’s possession, which includes houses, office buildings, and premises rented to third parties. Property tax as a concept has been around for centuries and is recognized all across the world, with records dating back to the Middle Ages of farmers and peasants paying tax on their land.
Types of Property
Property in India is classified into four categories, which help the government estimate tax based on certain criteria. The different property divisions in the country are mentioned below.
- Land – in its most basic form, without any construction or improvement.
- Improvements made to land – this includes immovable manmade creations like buildings and godowns.
- Personal property – This includes movable man-made objects like cranes, cars, or buses.
- Intangible property
- Property owners pay property tax calculated by the local government where the property is located.
- Property tax is based on the value of the property, which can be real estate or—in many jurisdictions—also tangible personal property.
- Improvements in water and sewer use the assessed taxes.