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Everything You Need to Know About Property Tax and How is it Calculated

Property tax is a significant revenue source for the local authorities in India. It is basically a direct tax imposed on property owners based on the value of their properties. The revenue generated here from this tax is used to fund local development and the provision of essential services.

If you are a property owner in India, then you might be well aware of the fact that paying this tax annually is of utmost importance. Moreover, paying this was a hassle long back, but since technology has taken over, it has become super easy, enabling users to complete property tax online easily with their smartphone.

What is property tax?

In our country, property tax is a tax imposed by the local municipal

authorities on the property owners. Keep in mind that it is imposed on the owners and not tenants. This tax type is levied on the value of the property owned by an individual or an entity. For municipal corporations, property tax is one of the key sources of revenue and is basically used to fund local infrastructure development.

The amount of property tax is usually determined on the basis of the rental value or the market value of the property. Rates of the tax may vary across different states and cities in our country.

How is it calculated?

It is factually right that the exact calculation method may vary slightly from one state or municipality to another. There are several methods of calculating property taxes, but generally, the following factors are taken into account:

● Property Assessment

The first and foremost step in calculating property tax is the assessment of the value of the property. This is usually conducted by the local municipality or a government-designated authority. The property’s value is determined by location, size, construction type, age, amenities and prevailing rates.


Unit Area Value system or UAV system is basically where the property’s area is multiplied by the applicable Unit Area Value to arrive at the value of the property. The UAV is determined totally based on the locality and the type of property.

● Annual Rental Value (ARV)

In some certain cases, even the ARV of the property is used to calculate this tax. The authorities assess the potential income the property could generate in a year if rented out and then levy tax accordingly.

● Tax Rate

Once the authorities determine the property’s value, it is multiplied by the applicable tax rate to calculate the amount. The tax rate here varies across municipalities and can differ for residential, commercial, and industrial properties.

How to make property tax online payment?

Paying property tax nowadays is super easy. You just need the right

application on your smartphone. One of the best applications, Bajaj Finserv, helps you do so without getting up from your seat at home. Simply follow the below-mentioned steps, and you are more than good to go:

  1. Download the Bajaj Finserv app
  2. Sign up with your required details
  3. Go to the Bills & Recharges section
  4. At the bottom, go to Municipal Taxes
  5. Fill in the required details

So, the next time you are in a tussle about “How to Pay Property Tax?”, you now know what to do.

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