Property tax is a tax levied by the local municipal authority or governing body on real estate property owned by an individual, business, or institution. It is one of the oldest and most stable forms of taxation, and it serves as a primary source of revenue for local governments—used to fund public services such as sanitation, water supply, road maintenance, education, street lighting, and emergency services.

🔍 Definition:

Property Tax is a recurring tax that the owner of a property must pay based on the assessed value of the property, which includes both the land and any structures on it.

📜 Legal Basis:

In most countries, including India, the authority to levy property tax is granted to municipal corporations, municipal councils, and panchayats under urban and local body governance acts. For instance, in India, the Constitution (74th Amendment Act, 1992) empowers local bodies to collect property taxes.

🏢 What Types of Properties Are Taxed?

1. Residential properties – flats, apartments, villas, bungalows

2. Commercial properties – shops, malls, office spaces

3. Industrial properties – factories, warehouses

4. Vacant lands – plots without construction

5. Institutional properties – depending on usage, some may be exempt (e.g., schools, religious places)

🧮 How is Property Tax Calculated?

The formula varies by city and tax system. But generally:

Property Tax = Tax Rate × Assessed Value of the Property

The assessed value depends on factors like:

• Location of the property (zone-based classification)

• Size and built-up area

• Property usage (residential, commercial, industrial)

• Type of construction (pucca/kachcha)

• Age of the property

• Occupancy status (owner-occupied or rented)

📆 When is Property Tax Paid?

• Usually annually or semi-annually.

• Many cities offer a discount for early or lump-sum payments.

• Late payments attract penalties and interest.

🧾 Who Has to Pay Property Tax?

• The legal owner of the property, regardless of whether the property is rented out or unoccupied.

• In case of leasehold properties, long-term leaseholders may be liable depending on agreement terms.

🔄 Why is Property Tax Important?

• For local authorities: It funds city-level infrastructure and basic services.

• For owners: Regular payment keeps your property records clear and avoids legal complications or penalties.

• For investors: It impacts your net returns, so proper planning is essential.