House tax (property tax) is the most important tax we say to our local government - panchayat or municipality or corporation.
It is always better to pay a tax to a local government, when compared to State or Union governments. When we pay taxes to the local government we can better understand how the tax money is spent and what are the services provided to us with that money. Therefore we can keep an eye on the local government, and bring pressure to improve the services.
Property tax should be based on some general principles, and there should be a uniform rate of tax for the same category of houses. There should be openness in tax assessment, and you should know how the tax amount is decided. Please insist on such openness and uniform application of norms, so that you do not feel cheated.
How is House Tax determined?
The House Tax is decided usually on the basis of the rental value. In case the house is not rented, the probable rent is fixed. This is called the Monthly Rental Value (MRV). If the house is let out, the actual rent is taken into account.
The law has been amended in 1992, and since 1993 the system of fixing tax has been changed. This new law is meant to make taxation more uniform, fair and open. The local tax rates are decided on three important criteria as follows:
- The way the property is utilized
- Industrial etc.
- Nature of construction
- Mud walls
- Brick walls
- Thatched roof
- Asbestos roof
- Madras terrace
- Tiled roof
- Concrete (ordinary)
- Concrete (Posh)
- Mosaic flooring
- Marble flooring etc
- The nature of locality
- Low income area
- Posh residential area
- Central location
- Outlying area etc
In case of multi-stored complexes, the rate is the same for first three floors. Above that, the rate will be less.
From the above date monthly rental value (MRV) will be calculated according to standard and uniform slab rates. From MRV, the annual rental value (ARV) is calculated. The net ARV is calculated after deducting 10% for depreciation and maintenance allowance. On the net ARV, tax will be fixed ranging from 17% to 30%.
This new method is similar in all towns and cities in the State. This ensures greater uniformity and fairness, and is calculated on the basis of plinth area.
Please get to know the procedure and ensure that your house tax is generally comparable to the houses of similar type in your area. Since the criteria are known, please obtain the slab rates for your area, and calculate for yourself whether the tax amount fixed is according to the criteria or not. If the municipal employees fix tax arbitrarily, please bring pressure collectively and insist on uniform application of rules.
- The Property Tax usually has the following four components.
- General tax
- Conservancy tax
- Lighting tax
- Drainage tax (storm water drainage in case of Hyderabad city)
- Property taxes are revised once every five years.
Property Tax in Hyderabad City
In Hyderabad city this revised method of assessment has not been implemented because of court litigation. The assessment is therefore done on the basis of plinth area. The city is divided into 90 zones based on usage, nature of construction and location. Rates per square meter have been notified for all these 90 zones. These rates are available at the following places.
- Municipal Corporation office
- 6 circle offices
- Secunderabad division office
The way your tax is decided is important to you. Please make sure that the tax is fixed fairly and uniformly. If your tax has been fixed unfairly, and is not comparable to similar houses in the locality, you can appeal to the Municipal Commissioner in writing.
- Please pay the taxes regularly to avoid penalties.
Even if you do not receive demand notices, it is better to pay in time. If you postpone, and need to pay later, you may not get proper information about the exact tax and penalties.
Before selling your property, you must pay all your tax dues and obtain a no dues certificate. Otherwise the sale of property cannot be registered.
If you need any assistance, please contact the local Lok Satta unit for information and guidance. If there is no local unit, please form one in consultation with your district or apex unit.