Property tax or Land tax is the fee that you have to pay when purchasing a built property. Land tax is also referred as a property tax is an amount that is levied on the purchase of a property which includes all manmade immovable developments such as buildings and godowns. It’s a tax that you have to pay annually in some cases semi annually to your local government or Municipal Corporation. The tax amount is based on the area, construction, building and property size. Vacant land is exempted from the land tax. The land tax may vary in different states.

The land tax depends upon various factors which include:

-Size/area of the land,

-The locality of the land,

-Gender, discounts for female owners,

-Age, Relaxation in tax amount for senior citizens,

-Facilities provided by the local government.

Why land tax is collected?

The land tax is collected by our local authority or Municipal Corporation to provide us better facilities which include good roads, cleanliness, transport service, drainage and other civic facilities. This tax helps the government to provide better infrastructure. In case of non-payment of dues, the local body may take legal action on you and can cut down the supply of water and electricity.

Also, the tax receipt is the proof of the ownership of property, only the owner/co-owner is liable to pay the tax. In legal disputes these receipts are helpful for proving the ownership of property.

How land tax is calculated?

Land tax is different in different states and the location of the property. Different states use different methods for calculating it; however, a general structure remains unchanged. The tax is calculated by the total land area, occupancy status of property (occupied or rented), type of property (residential or commercial), year of construction, storey, Floor Space Index (FSI) and carpet area of the property.

-Municipal Corporation of Greater Mumbai (MCGM) uses the below formula to calculate the property tax:

Property tax= Built-up area x FSI x category of use x base value x property type

-Delhi Municipal corporation uses following formula to calculate the property tax

Property tax=Rate of tax x Annual rate

As above, property tax calculation changes as per the location of the property.