Understanding Property Taxes: What Homeowners Need to Know

Property Taxes

Many people think that they have to pay only one time to become the owner of a property. But in reality, they have to pay small amounts to the government as property tax to keep their property ownership.

The government levy property taxes on property owners to generate income for development. So, one has to give these taxes annually to civic bodies across India. Below, we have to discuss everything about paying property taxes in India.

How are property taxes calculated?

Many factors determine how much amount you have to pay to the local body as property taxes, such as

  • Location and size of the property.
  • Gender of the property owner, like, if the owner is female, she may be eligible for discounts.
  • The age of the property owner, for example, older adults, may be eligible for discounts.

Why do you need to pay property taxes?

Whether you own a commercial property orresidential property in Mohali, you need to pay property taxes on time because civic bodies require money to perform certain services, such as cleanliness, water supply and maintenance of roads and sewerage, etc. And property taxes provide money to civic bodies to do all these things. If you don’t pay property taxes, the municipal body may disconnect your water supply and take legal action against you to recover the money you have not paid to them.

How to pay property taxes?

You can pay your property tax online or offline. For some, paying property tax online is convenient and aids in keeping a record of transactions. However, to pay online- One must register in their respective municipal corporation. After that, individuals are required to provide other information such as property type, etc. Next is to choose the mode of payment to pay the tax. However, if you like to pay the tax offline, you need to visit your city municipal corporation and pay through cash, cheque or demand draft.

Note: Property taxes and regulations keep changing, so homeowners need to stay informed. The best is to consult property agents in Mohali, local tax authorities or tax advisors to pay your property tax on time.

How are municipalities calculate property taxes?

Municipalities use three ways to calculate property taxes: unit area value system, annual rental value system and capital value system.

Unit area value system

In the unit area value system, tax is priced according to the returns of the property, which is based on its location, usage and other factors.

Annual rental value system

In the annual rental value system, tax is priced according to the expected rent of the property and not its returns.

Capital value system

Tax is priced in the capital value system according to the assessed/market value of the land. The government determines the market value of a property based on its location.

Who is exempted from property taxes?

Every state of India has different rules when it comes to property taxes, but certain types of people get rebates on their tax liability. Some organisations are also exempted from property taxes across the country, which means they do not need to pay property tax. Best property dealers in Mohali can better assist you in determining whether you are exempted from property taxes.

People who are exempted from property taxes include:

  • Senior citizens.
  • Ex-army, navy and other people who belong to the defence services.
  • Family members of martyrs of defence services such as BSF, Indian Army, CRPF and fire brigade.
  • Educational institutes and agriculture land.

As these exemptions are offered to large chunks of populations, municipal corporations fall short of generating cash for which there is potential. Because of this, many experts have been suggesting rolling back some exemptions, but the chances of the government agreeing to these suggestions are less.

Penalties for not paying property taxes

Municipal corporations across India impose penalties on home/property owners when they don’t pay taxes. Though the amount that needs to pay depends on the city where you live, it is 1% to 2% (monthly penalty) on the outstanding amount. However, it is best to adhere to due dates to pay any additional charges on the property tax.


Property tax is a necessary aspect of homeownership as they help local bodies generate revenue for development purpose. So, homeowners should know everything about property taxes, such as how it is calculated, who is exempted from home property taxes, etc. They should also keep themselves updated regarding any change in the taxes and seek professional help to manage their home budget.

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