Punjab Property Tax

Property tax is a chief source of income for any state government. It has to be paid by the property owners, and the fund collected under the same is used to enhance various civic amenities such as laying roads; improving sanitation and hygiene in public places; etc. In this article, we look at the provisions related to Punjab property tax in detail.

Taxable Properties

Taxable properties are classified into four categories so as to enable the government to calculate tax based on certain criteria. The following are the different categories of property division:

Land - A basic form of premise 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.

Punjab Tax Rates

On a positive note, the Government of Punjab has recently reduced the rates of property tax and has enabled self-assessment to its citizens unlike the previous provision of the government assessment. The Government has already agreed to improvise the Punjab Municipal Act 1911, and the Punjab Municipal Corporation Act 1976, abiding by the recommendations of the Cabinet Sub Committee pertaining to the imposition of Property tax in the state. Here's an overview of the methods used for calculating property tax in the State:

The formula to Calculate Property Tax on Residential Areas

Property Tax = Collector Rate of Property + Construction Cost (Rs. 500 per square feet) - Depreciation (10 per cent of construction cost). 5 percent of the total cost is taken as the annual cost and 0.5 percent tax is charged on the annual cost.

The formula to Calculate Property Tax on Vacant Plot

5 percent of the collector rate of the vacant plot would be taken as the annual cost and 0.5 percent of tax is charged as the annual cost for vacant plots whose area is between 100 to 500 square yards. Vacant plot includes residential, commercial, industrial, organizational or unproductive lands.

The formula to Calculate Property Tax on Rented Property

7.5 percent of the annual tax would be imposed on residential rental property and 10 percent for rented commercial, industrial and organizational property.

Reduction of Property tax

The rates for house taxes have been drastically reduced from 15 percent to 10 percent and the rental residential property tax have been reduced from 10 percent to 7.5 percent for a year. The taxes for non-rented commercial property have been reduced from 15 percent to 3 percent of the annual value. Self-occupied houses that are up to 50 square yards are charged with a consolidated amount of Rs. 50 per year, while houses that are between 50 to 100 square yards are charged a consolidated amount of Rs. 150 per year. The annual rate of property tax for a self-occupied house having an area between 100 to 500 square yards is 0.5 percent and the annual rate for a self-occupied residential house above 500 square yards is 1 percent. For vacant plots and un-utilized buildings, the annual value would be 0.20 per cent.

Divisions of Municipalities

Municipalities in the State of Punjab have been divided into three categories for the purpose of property tax, namely A, B, and C. Category A has three sectors and categories B and C has two sectors each. The cities that come under Category A contain the highest property tax.

Category A

Amritsar, Jalandhar, Ludhiana, Patiala and SAS Nagar

Category B

Bathinda, Phagwara, Moga, Pathankot, Hoshiarpur, Gurdaspur, Batala, Kapurthala, Khanna, Jagraon, Nangal, Rajpura, Nabha, Mandi Gobindgarh, Sangrur, Malerkotla, Sunam, Barnala, Kharar, Zirakpur, Mansa, Dera Bassi, Muktsar, Malout, Ferozepur, Abohar, Fazilka, Faridkot, Kotkapura.

Category C

All the remaining municipalities of Punjab.

Annual Property Tax Rates

Annual property taxes are calculated for each square yard, which is substantiated below for your reference:

Residential Areas

Property taxes are applicable to houses that are more than 125 yards and flats that are more than 500 square yards. Above 50% of tax is levied for basements, and to every floor including the open space of the plotted houses:

For properties under Category A, Rs. 2 is charged.
For properties under Category B, Rs. 1-2 is charged.
For properties under Category C, 50 Paise to Re. 1 is charged.

Commercial Areas

The Tax rate for commercial places covering up to 100 square units:

For properties under Category A, Rs. 1.75 is charged.
For properties under Category B, Rs. 1.5-3 is charged.
For properties under Category C, Rs. 1-2 is charged.

The Tax rate for commercial places ranging from 101 to 1,000 square units:

For properties under Category A, Rs. 2-5 is charged.
For properties under Category B, Rs. 2-4 is charged.
For properties under Category C, Rs, 1-2 is charged.

The Tax rate for commercial places that are above 1,000 square units:

For properties under Category A, Rs. 3-6 is charged.
For properties under Category B, Rs. 2.5-5 is charged.
For properties under Category C, Rs. 1.5-3 is charged.

The tax rate for Multiplexes and shopping malls:

For properties under Category A, Rs. 15 is charged.
For properties under Category B, Rs. 10 is charged.
For properties under Category C, Rs. 8 is charged.

The tax rate for marriage places and resorts:

For properties under Category A, Rs. 6 is charged.
For properties under Category B, Rs. 4 is charged.
For properties under Category C, Rs. 2 is charged.

The tax rate for hotels and motels up to 5 rooms with a 2-star rating or without a rating:

For properties under Category A, Rs. 4-6 is charged.
For properties under Category B, Rs. 3-4 is charged.
For properties under Category C, Rs.1.5-2 is charged.

The tax rate for hotels and motels up to 16 or more rooms with or without a rating:

For properties under Category A, Rs. 7-9 is charged.
For properties under Category B, Rs. 6-8 is charged.
For properties under Category C, Rs. 5-7 is charged.

Tax rate for manufacturing units, educational institutions and storage godowns that are up to 4,000 yards:

For properties under Category A, Rs. 5 is charged.
For properties under Category B, Rs. 4 is charged.
For properties under Category C, Rs. 3 is charged.

Tax rate for manufacturing units, educational institutions and storage godowns that are more than 4,000 yards:

For properties under Category A, Rs. 7.5 is charged.
For properties under Category B, Rs. 6 is charged.
For properties under Category C, Rs. 4 is charged.

Application Procedure

The application procedure for property tax in Punjab has been specified below: Step 1: Visit the Center The applicant has to approach the Municipal Corporation. Step 2: Obtain the application He/she has to obtain the application form by paying the appropriate fee. Step 3: Enter the Details The applicant has to enter all the required details in the application form. Step 4: Submit the application Once all the details are entered, the applicant has to submit the application to the concerned authority. Step 5: Collect the Challan After remitting the fee in the fee counter, the applicant receives a challan from the officials. This challan can be used as a proof for paying property tax.

Exemptions

Property taxes are not levied for the following properties:

All religious institutions, cow shelters, the care centres for stray animals, cremation grounds, historical buildings, old-age homes, orphanages, freedom fighters, BPL (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.
Vacant plots and houses constructed on plots with an area of 50 square yards, single-storeyed residential houses that covers an area up to 125 square yards and flats up to 500 sq feet.
Newly created Nagar panchayats (the ones that are created before April 2014 and new regions) that are included in municipalities.
Widows of the state and differently-abled people can avail a property tax refund of Rs. 5,000.
All educational institutions that are not under the charitable institutions may avail a refund of 50% of property tax.

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