A Guide to Calculating and Paying Property Tax Online in Punjab

Tax is the government’s biggest revenue which helps in the development of the country. We need to pay tax on most of the things we purchase and the property is also one of them. While it is the dream of most people to purchase a home, we also need to pay tax on the house purchase annually.

Property tax is the annual payment paid to the municipal or state authority by a property owner. All real estate, their homes, office buildings and the land they have leased from others are included in the property.

As the country is still in the process of digitization, we can pay taxes both manually and online. Though the payment of property tax by visiting the municipal corporation is time consuming and you need to take some time off from your work just to pay tax.

Moreover, considering the outbreak of COVID-19 it is safer for you to just pay tax online as it also saves your time & is very much convenient. As most people are not familiar with the online calculation of tax, we will help you with it.

Property tax is paid on the property which owned by a person, as there are different types of properties, in our tax law it is divided into four different categories for easy calculation of tax.

• Land – A basic form of property without any construction or improvement.
• Improvements made in the land – immovable properties such as buildings and godowns.
• Personal property – movable objects like cranes, cars or buses.
• Intangible property.

Beside that following properties are exempted from property tax:

All religious institutions, cow shelters, the care centres for stray animals, cremation grounds, historical buildings, old-age homes, orphanages, freedom fighters, below poverty line families, ex-servicemen, land and buildings controlled by the municipalities, government hospitals and dispensaries, government-aided schools and colleges, government hospitals and dispensaries, parking lots in multi-storeyed flats and land used for agricultural and horticultural purposes.

There are different methods of calculating tax and it varies from organisation to organisation.

The method for estimating residential property tax:

Property Tax = property collector rate + construction charge (500 per square feet) – depreciation (10% of construction costs).

The annual cost is 5 percent of the gross cost and the annual cost is paid with a 0.5 percent levy.

The formula for calculating vacant property tax:

The annual costs of 5 percent of the collector rate would be considered for the vacant plot and 0.5 percent tax would be paid for the vacant plots of between 100 and 500 square metres.

The vacant property shall contain residential, private, industrial, corporate or unproductive area.

The method of calculating property tax on rental/ leased property:

The annual residential property tax will be 7.5 percent and the commercial, retail and corporate land rented at 10 percent.

Calculating Property Tax Online:

property tax is calculated with this formula

Property tax= base value of the property x floor factor x type of building x age factor x built up area x category of use.

You need to check following things before calculating tax:

• The area/ location of the property should be clearly known
• Knowledge about whether the property is self occupied or rented is required.
• Information about type of property it is commercial or residential.

This information is very essential as there are different formulas to calculate different category of property.

Payment of Property Tax Online: It is very easy to pay tax online & it also saves a lot of time.

• Visit the official website of municipal corporation of your property area.
• Navigate to the tab where you’ll be able to file your property tax.
• Enter the property details as well as other necessary information on this page when you fill in the form.
• Enter any additional information that the website can request. This can include details of ownership, type of property, occupancy details, floor and total area, age, category of exemption, etc.
• When all of these documents have been sent, you will be asked to validate the information and to continue with the payment of the municipal tax. Go over all the documents carefully to make sure the specifics are correct. If authenticated, press the “Submit” tab.
• If you have finished the process of paying the property tax, you will now be able to view the tax receipt online. You will be able to view all the necessary information, such as e-receipt on property tax, filed tax report, etc., as soon as you complete the process.

Documents collected after the municipal tax process, including tax transcripts, should be maintained for future use. These receipts may also be needed for other reasons, such as when you have to pay income tax on sale of property. You will also have to submit the same documents when applying for a secure loan, and you will have to submit past tax receipts during the review.

Precaution to take while filing property tax:

• Property tax is only paid to government authority/ municipal corporation of your area. You should never pay any money to any other person or corporation; it can be a scam.
• In case of late payment, you have to pay the additional money as a fine. This will vary from 5 % to 20% in late payment interest rates.
• Section 80C of the Income Tax Act. Reductions are only applicable with respect to the registration amount on house and stamp duty.

With online payment of tax, not only it saves your time it also helps in keeping record of payments as it is easy to take care of soft copy of receipt or document. Hard copy of receipt can be misplaced and it can be difficult to present it when required.

It is necessary to pay property taxes. As it aims to raise the profits of urban residents and towns and ensures that essential facilities are available at the locations. But now we know how to measure the tax online and how easy it is to pay online. So, we make sure that we pay property tax on time by remarking as our primary obligation.