Individuals who own a property in India need to bear a certain amount of tax on the same each year. The exact figure of property tax depends on various factors, such as the property valuation, type of construction, number of floors in it and more.
- Property tax accounts for just around 0.2% of India’s GDP.
Every municipal area has different property tax laws and norms. Residents in the Hyderabad area, for instance, need to pay such taxes as per the guidelines set by the Greater Hyderabad Municipal Corporation or GHMC. The municipality leverages this income to improve public services in Hyderabad.
How does the GHMC calculate property taxes?
GHMC utilises annual rental value to determine a property’s tax rate. Furthermore, it also enlists various slab rates when charging taxes on residential properties. One can assess property tax Hyderabad using the following formula –
- For residential properties
Annual property tax = 8% library cess x Gross Annual Rental Value x slab rate (which can range between 17% and 30% based on Monthly Rental Value of the property) – 10% depreciation
- One of the reasons why property tax collection is so low in India is because of the sheer proportion of exempted properties.
- Almost 10% of urban properties are exempted from bearing the said taxation.
Keep in mind that this formula listed above is for residential property tax Hyderabad calculations. A separate formula applies for commercial property tax liability calculation.
- For commercial properties
In case the property in question is a commercial space, use the following formula to determine how much you would need to pay as taxes –
Annual property tax = Plinth Area x 3.5 x MRV in Rs./square feet.
Plinth area refers to the total built-up area of a property, including garages and balconies if any.
Importance of paying the Greater Hyderabad Municipal Corporation property tax
Paying property tax on time is crucial for a variety of reasons. One of these being that the government uses this money to improve the state of public services in Hyderabad and its surrounding areas.
- In India, only around 37% of the property tax outstanding is collected. The remaining is left unpaid.
- Even in Mumbai,the financial capital of India,only 55% of due property taxes are cleared every year.
If you want to ensure proper tax payments for your property in Hyderabad, following the steps mentioned below can help you complete the process conveniently.
- Step 1: Visit the online GHMC website to pay property tax Hyderabad.
- Step 2: Enter your PTIN associated with your property and click on the option marked ‘Know Property Tax Dues’.
- Step 3: Check the necessary amount and proceed to online payment using your debit or credit card. You can also complete the payment through net banking.
- Step 4: Regardless of the option you pick, authorise the transaction in the payment gateway page to complete the procedure.
One can also pay property tax using the offline approach. In such a case, you would need to draw a demand draft or cheque in favour of the Commissioner, GHMC and submit the same at the authorised outlets.
Will clearing property tax help you avail loans?
Individuals who are looking to avail credit against their property would need to clear all outstanding taxes on the same before approaching a lender. Tax receipts are one of the integral items in the list of documents needed to apply for a loan against property. Therefore, one would need to ensure that property taxes are clear on any property he/she is looking to collateralise against the borrowed sum.
If you are eligible and possess the necessary documents, reputed institutions are ready to provide loan against property worth up to Rs.3.5 crore.
Some housing finance companies also provide pre-approved offers to simplify availing such loans, ensuring faster approvals. These offers are available on a range of financial products, including home loans and loan against property. You can check your pre-approved offers by submitting your name and contact information.
Keep in mind that other factors, such as credit score also affect loan against property eligibility. This is why one must check his/her CIBIL score before applying for such loans.A lower score can lead to application rejection; this, in turn, will reduce an applicant’s credit score.
It is up to the borrower to decide how to use a loan against property as these credits are free from end-use restrictions. Receipts from property tax Hyderabad can surely help streamline the application process. Few other necessary documents needed to apply for a loan against property include OVDs or KYC (PAN, Aadhaar, voter ID, driving license, passport, etc.), bank account statements, income tax returns, salary slips (for salaried individuals), proof of business existence (for self-employed customers), and documents of the property to be mortgaged.