Property Tax - Tamil Nadu

The tax levied on lands and buildings are referred to as property tax. The VII schedule of the Indian Constitution provides the provisions connected with property tax in the State of Tamil Nadu. Property tax is considered to be a cornerstone income for the state's Municipal funding, and hence is considered to be a tax of great necessity. In this article, we look at the property tax regulations in Tamil Nadu in detail.

What is a Property Tax?

The total amount paid by a landlord to the concerned local government or to the municipal corporation of the concerned area is called as property tax. An individual is liable to remit property tax for all tangible real estate property, houses, office buildings and for the properties that he/she has rented to others. Property tax is charged by the municipal corporation annually or semi-annually and the amount is levied based on the area, construction, property size, building, etc. The ince from the property tax collection are used by the municipality or government for repairing roads, constructing schools or other buildings and for sanitation purposes. Central government properties and vacant properties are generally exempted from property taxation.

Calculation of Property Tax

Property tax of a building is calculated based on its basement area, the rate prevalent in the street where the property is located, usage of the building (residential or non-residential access), type of occupancy (owner or tenant) and the total span of the building's existence.

Payment of Property Tax

All landowners should pay property tax twice in a year, and the deadlines are stipulated to be March and September. However, landowners can alternatively choose to pay the property tax annually. There are two methods to pay property tax, which are:

Making payments to the revenue officer or to the assistant revenue officer of the Zonal offices I to XV.
Making payments in any of the branches of Axis Bank, Canara Bank, City Union Bank, HDFC Bank, ICICI Bank, IDBI Bank and Indian Overseas Bank.

Revision of Property Tax Norms

The Tamil Nadu Government has released a Government Order (GO) on April 1st, 2018, stating a general revision of property tax has to be implemented in all urban local bodies for the current half year 2018-19 according to the provisions laid down by the Urban Local Bodies Act. The revised property tax has been increased by 50% for residential buildings and 100% for commercial buildings.

Filling Self Declaration forms

Self-declaration forms can be easily obtained by downloading it from the Corporation Website. In regions where citizens may not be able to access the internet, the applicant can obtain the application form from the concerned zonal office. At the time of registration, the applicant has to register the mobile number with the Corporation to receive notifications from various civic services online. If an applicant has already registered his/her mobile number, then the same can be used for OTP verification of the house owner's property tax record. If a house owner has not registered his/her mobile number, it can be done prior to the online verification. While filling the application form online, the applicant must be ready with basic details like Zone number, Division number and bill number. These details are given in an individual's Property Tax Card.

Required Details

Given below are the required details that should be entered in the form:

The land area of individual plots.
Floor area (if it is a residential or commercial, permanent or semi-permanent).
Year of construction of the building.

Processing Application

Once the application form is submitted, the house owner receives an SMS acknowledging the submission along with the reference number. Those applicants who submit the application offline will be receiving a stamped acknowledgement counterfoil.

Annual Value Determination

There are five steps that are used in the determination of the annual value.

Basic Value

Basic value is the rental yield per square feet of residential properties per month. This is applicable in all the Municipalities and Township committees of different zones for Taxation of the Annual Rental value of the buildings and lands. To determine the basic value, instructions have been given pertaining to the newly constructed residential (RCC) buildings measuring 1000 square feet to be converted into a rental value per square feet.

Depreciation

Based on the age of buildings, the following reduction in the annual value is applicable.

No depreciation for buildings that are up to 5 years old.
A 15% depreciation is applicable for buildings that are 5-15 years old.
A 20% depreciation is applicable for buildings that has been existence for more than 20 years .

Occupation

A discount of 30% is accorded to buildings occupied by the owners.

Nature of building

For taxation purposes, buildings are categorized into thatched, tiled and RCC. The following discount implications are applicable for these categories:

A discount of 50% is applicable for thatched roof buildings.
A discount of 25% is applicable for tiled, AC and GA sheet, etc.
No discounts are applicable for RCC buildings.

Ceiling

Tax hikes are usually done once in five years. These hikes must be reasonable as it shouldn't pose any unwarranted burden on the taxpayer. Considering this, certain limitations are imposed on tax hikes, which are as follows:

For residential buildings occupied by the owners, the hike shouldn't exceed 25%.
For residential buildings that are rented, it shouldn't exceed 50%.
For industrial buildings, it shouldn't exceed 100%.
For commercial buildings, the property tax assessment shouldn't exceed 150%.

Property Form Application Form