Property tax is a chief source of income for any state government. It has to be paid by property owners, and fund collected under 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 provisions related to Punjab property tax in detail.
Steps for Punjab Property Tax Pay Online Calculation:
Taxable properties are classified into four categories so as to enable government to calculate tax based on certain criteria. Following are different categories of property division:
Land – A basic form of premise without any construction or improvement.
Improvements made in land – immovable properties such as buildings and godowns.
Personal property – movable objects like cranes, cars or buses.
Punjab Tax Rates
On a positive note, Government of Punjab has recently reduced rates of property tax and has enabled self-assessment to its citizens unlike previous provision of government assessment. Government has already agreed to improvise Punjab Municipal Act 1911, and Punjab Municipal Corporation Act 1976, abiding by recommendations of Cabinet Sub Committee pertaining to imposition of Property tax in state. Here’s an overview of methods used for calculating property tax in State:
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 total cost is taken as annual cost and 0.5 percent tax is charged on annual cost.
Formula to Calculate Property Tax on Vacant Plot
5 percent of collector rate of vacant plot would be taken as annual cost and 0.5 percent of tax is charged as annual cost for vacant plots whose area is between 100 to 500 square yards.
Vacant plot includes residential, commercial, industrial, organizational or unproductive lands.
Formula to Calculate Property Tax on Rented Property
7.5 percent of annual tax would be imposed on residential rental property and 10 percent for rented commercial, industrial and organizational property.
Reduction of Property tax
Rates for house taxes have been drastically reduced from 15 percent to 10 percent and rental residential property tax has been reduced from 10 percent to 7.5 percent for a year.
Taxes for non-rented commercial property have been reduced from 15 percent to 3 percent of 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.
Annual rate of property tax for a self-occupied house having an area between 100 to 500 square yards is 0.5 percent and annual rate for a self-occupied residential house above 500 square yards is 1 percent. For vacant plots and un-utilized buildings, annual value would be 0.20 percent.
Divisions of Municipalities
Municipalities in State of Punjab have been divided into three categories for purpose of property tax, namely A, B, and C. Category A has three sectors and categories B and C have two sectors each. cities that come under Category A contain highest property tax.
Amritsar, Jalandhar, Ludhiana, Patiala and SAS Nagar
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.
All remaining municipalities of Punjab.
Annual Property Tax Rates
Annual property taxes are calculated for each square yard, which is substantiated below for your reference:
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 open space of 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.