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What is Property Tax & Why is it Necessary?


Property tax in India is a tax on property that the government of a country imposes. It is levied on the value of the land and

improvements created on it for non-agricultural purposes.

It is one of the primary sources of state government revenue in India.

Property taxes make up an important part of state and local government revenues in India.

Property taxes address public finance problems and provide better services to citizens.


Before working out your strategy for property tax planning, it

is important to be aware of some key facts about property taxes in India. It will help you understand your savings options or

planning for future purchases or renovations.


Every State government in India levies a property tax. Some

states are specific about the type of property charged with the

tax, while others leave it to the individual to determine how to appropriate their taxes.

Certain States levy a typical property tax of 3%, while others levy a higher property tax, say 6%.

Or higher.Different states levy property tax in different ways as well.


Some states, like Maharashtra, collect real property taxes and

then apportion them to various municipalities. It is up to

the municipality to decide how they will use their share of

taxes – whether they will spend it on infrastructure,

general administration, or other programs, such as schools.


In some states, like Maharashtra, property taxes are transferred

to local municipalities, while in other states, the central

government collects and then distributes the tax. Property Tax =

(3% of Total Value) x (Total Value) x (Number of Exemptions)Ad valorem tax is a property tax that varies on property value.


Government agencies may assess the value of properties in a

given area and tax. These taxes are often based on the market value of real estate rather than its appraised value.

Types of property tax


Property taxes are a major source of revenue for many municipalities.

The types of property tax vary from municipality to municipality.

The property tax is a significant source of revenue for many municipalities. 


In some cases, the property tax can be the primary source 

of revenue to generate funding for public service programs 

and services in local communities. And the costs associated with the provision of public infrastructure.


Some property taxes are based on the value of a property 

while others are based on how much space a building occupies or its land. 


Some jurisdictions may also impose ad valorem taxes that 

keep track of inflation and interest rates over time and adjust 

tax rates to reflect changes in those values.


The main purpose of a property tax is to provide 

revenue for public infrastructures such as schools, roads, and law enforcement.

Property taxes are generally used as a general 

source of revenue in local jurisdictions or states in which they apply.

They are imposed at the municipal level and 

vary between jurisdictions and localities. The amount 

that individuals, families, and corporations pay is based on the 

fair market value of their property. 


How much is the property tax in India


he property tax is a complicated system with many 

factors that calculate how much money you owe.

It involves the determination of capital gains, inflation, carbon credit value, and more.


The most important thing to remember when calculating 

your property tax is to stay consistent with your calculations so

 you don’t end up paying an overpayment or underpayment. 


To avoid confusion when determining a property tax for 

your home, it’s wise to get professional help from an accountant. Or a local tax specialist.


There are many ways to calculate property taxes, but the 

equalized assessed value (EAV) is the most common. EAV is the 

total value of all real estate in a municipality multiplied by 

its current effective property tax rate.


How to check property tax online 


Property Tax is an important and underestimated tax an

individual must pay before acquiring a property. Property Tax is

a tax levied on the final sale price of a given property, or its estimated replacement cost, at each state level.


Property Tax can be calculated based on below methods:

Actual Value: This method calculates the amount of money an individual has paid for the property. This method considers

all fixed expenses like mortgage interest and depreciation,

deducted from the total cost incurred to buy a property. –

Replacement Cost: This is the amount of money that would

have had to be spent on buying another similar item to replace it with one’s existing home. –

Current Replacement Cost: This method calculates what it

would cost in today’s market if someone were to buy a similar

item in today’s market or if they were to build a new home according to the area’s standard of living.-

Nominal Value: This is an arbitrary value used as an equal for what an item is worth on the open market.

property tax-deductible in India


In India, property tax is a big issue. Not because it’s a large 

part of the country’s expenditure but also because it 

income inequality in the country. 


A property tax is an income tax levied by the local government 

on residential and non-residential property.

It is charged on the value of buildings and land before they are sold or rented to tenants or owners. 


The property tax funds public services such as schools, libraries and parks.

In some countries, it may also make up a large part of the 

tax revenue: for example, in France, 70% of the total tax revenue comes from income taxes.


Yet, because property values can be adjusted for inflation over 

time, they cannot be relied upon as a reliable way to raise significant funds.

A tax is a financial charge or other levy 

imposed upon an individual, company, or other taxable entity (such as a town, city, state, or country).

It is often collected through the tax payment system. 


A tax can be defined as a legal obligation on an individual to 

deliver money to the state or local government to raise revenue.

A government often collects it in the form of taxes and revenues collected. by the government.

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property tax exemption in income tax


Property tax is levied on transferring real property, such as land and buildings. 


The property tax exemption is one of the many ways 

that government provides for its citizens.

In other words, this exemption is one way in which taxes are deducted from an individual’s income. 


The property tax exception in income taxes can result in several different categories.

These include Property taxes that are paid 

with no deduction from taxable income, Property taxes that 

are deductible from taxable income at the percentage level, 

and Property taxes that are deductible as an expense deduction or

 a capital construction project deduction.


Property taxes are levied on property transfers, such as land and buildings.

This exemption is one way in which taxes are deducted from an individual’s income.


The property tax exception in income taxes can result in several different categories.

They include Property taxes that are paid 

with no deduction from taxable income, Property taxes that 

are deductible from taxable income, 


Property taxes are treated as a capital construction 

expense, Ordinary and necessary property taxes., and Ordinary and necessary property taxes.

Property taxes paid with no 

deduction from taxable income are levied to raise revenue 

for government services, like building schools and roads, which benefit society.


Property taxes deductible from taxable income allow taxpayers 

to deduct the amount of property tax they pay from their taxable income. 


Capital gain tax on the sale of property 


Capital gain tax is a property tax that reduces the number of 

capital gains when an owner sells the property, or the interest 

in land, business or financial asset. Capital gain taxes are imposed on gains realized on property sales.

These taxes vary by country and type of property.


, while the capital gains tax rate can be as high as 50% for other properties.

Many countries have enacted capital gain taxes 

to reduce speculation and curb wealth inequality.

Capital gains tax policy is used as a vehicle for redistributing wealth. 


Economic studies show that “capital gains taxes depress the 

the total level of income and the level of employment.” 

(Brennan, Earned Income Tax Credit) The net effect is that 

capital gains tax revenue can be expected to fund 

government spending with little revenue in return. Capital gain 

tax policy is a political tool meant to redistribute wealth 

from wealthier people and towards poorer people.


Long-term capital gain tax on property 


To understand the long-term capital gain tax on property,

you must first grasp what it is and how it works.


Long-term capital gain is an investor’s profit from selling an 

asset for more than its original cost. This is usually calculated as 

the difference between what was paid for the asset and its current market price.

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