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Property tax, also known as house tax, is a tax levied by a municipal corporation or local municipal authority on your home or other property. This tax is usually levied annually, although some municipal corporations also offer the option of paying it semi-annually or quarterly.

Who pays property tax?
This tax is levied on property owners in areas within the jurisdiction of that municipal corporation. It is called an ad valorem tax, meaning the higher the property value, the higher the tax. Property tax revenue is a major source of income for local governments. This money is spent on the maintenance and improvement of roads, parks, drains, lighting, and other public amenities.

How is property tax calculated?
The method for each municipal corporation may vary, depending on local laws and regulations. But a general formula is as follows:

Property Tax = (Base Value × Built-Up Area × Age Factor × Type of Building × Category of Use) Depreciation

Base Value: This is the price of the property per square foot in the area.

Built-Up Area: This includes the carpet area, walls, and other components of the house.

Age Factor: How old the property is. Newer properties generally attract higher taxes.

Type of Building: This determines whether the property is residential, commercial, or industrial.

Category of Use: This determines whether the property is for personal use, rented, or vacant.

Depreciation: Tax deductions are given based on age and condition.

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Basis of Tax on Residential Property
Several factors are considered when determining home tax:

Location: Homes in the city center or prime areas are taxed more.
Age of the property: Newer buildings are taxed higher, but higher depreciation can reduce the tax.

Size: Larger homes are taxed more.

Occupancy: The tax on self-occupied and rented homes may differ.

Property type: Independent house, flat, or condo. The property tax may vary.

Penalties for Late Property Tax
Property owners must pay their taxes on time. Delays may result in a surcharge or interest, which can range from 5% to 20%. This interest is charged on the principal amount.

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