Guide to Paying Property Tax in Punjab

Every property owner needs to pay property tax annually, it is one of our imperative obligation. The tax paid by us is major revenue of our government and it is ultimately utilized for our own benefit.

For building up the street, parks, government funded schools, sanitization, and other public spots.

With the digitization of country now it is very easy to pay property tax, even a person without any experience can pay property tax effortlessly. Let us guide you on how to pay property tax:

Type of Taxable Property:

Taxable properties are categorized into four types so that the government can calculate tax on the basis of these parameters:

• Land – A basic type of concept without any development or construction.
• Improvements made in the property –such as buildings and go-downs, other properties.
• Personal property–movable items such as cranes, cars or buses.
• Lastly, Intangible property.

Basic Knowledge About Tax Rates in Punjab:

Recently, the Government of Punjab reduced the rates of property tax and allowed its residents to self-assess as opposed to the previous requirement of a government assessment.

The government has already decided to improvise the Punjab Municipal Act 1911 and the Punjab Municipal Corporation Act 1976, in accordance with the Cabinet Sub Committee’s recommendations concerning the implementation of property tax in the province.

Previously, citizens used to pay 15 percent of the fee, which for rental residential properties was lowered to 10 per cent. And then it dropped from 10 per cent to 7.5 per cent annually.

Non-rented commercial property taxes have been lowered from 15% to 3% of the annual valuation. Self-occupied houses up to 50 square yards will be charged a combined sum of Rs. 50 a year, while houses between 50 and 100 square yards will be charged a combined amount of Rs.150 per annum.

For a self-occupied house with an area between 100 and 500 square yards, the annual property tax limit is 0.5 percent and the annual rate for a self-occupied residential house over 500 square yards is 1 percent. The average benefit for idle land and unused buildings will be 0.20 per cent.Considering the current scenario of Covid-19 it is preferred to pay property tax online and not manually for your own safety. Though we’ll guide you with both the ways of paying tax:

Property Tax Application Method:

• You need to visit the Nearby Municipal Corporation & have to fill the application form.
• Along with the form, allotment fees are required to be paid.
• Pay attention while filing the form and provide all the necessary information
• Submit the form to the concerned authority.
• After the payment of fees, the official will give you Challan
• This challan is your proof of payment of Property tax and needs to be kept safe.

Online Property Payment of Tax:

• Log in to the Municipal Corporation’s ‘official website’ to pay property tax
• Pick the property tax option, then proceed with the payment method.
• Select carefully the right form based on the classification in which your property falls.
• Choose the year of assessment for which the tax is measured.
• Fill out the identification number of the property and the necessary details and attach appropriate documents.
• Choose the payment option to pay carefully and when the transaction is complete, you can get a hardcopy or printout of the receipt for the future.

Things To Take Care of While Paying Property Tax:

• There are different ways and methods of estimating property tax and method of calculation of tax varies from corporation to corporation.
• When measuring property tax, there are crucial things to note, such as the occupation status of the property, facilities in providing the property, form of construction, year of construction and floor area, and even more should be noted when measuring property tax.
• Late tax payments will lead to you paying an interest rate as in the context of a fee. Which could be paid at an interest rate of 5-20 per cent and differs from various policies.

Divisions of Municipalities

Municipalities in the State of Punjab have been divided into three categories for the purpose of property tax, namely A, B, and C. Category A has three sectors and categories B and C has two sectors each. The cities that come under Category A contain the highest property tax.

Category A

Amritsar, Jalandhar, Ludhiana, Patiala and SAS Nagar

Category B

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.

Category C

All the remaining municipalities of Punjab.

Annual Property Tax Rates

Annual property taxes are calculated for each square yard, which is substantiated below for your reference:

Residential Areas

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 the open space of the 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.

Commercial Areas

The Tax rate for commercial places covering up to 100 square units: 

• For properties under Category A, Rs. 1.75 is charged.
• For properties under Category B, Rs. 1.5-3 is charged.
• For properties under Category C, Rs. 1-2 is charged.

The Tax rate for commercial places ranging from 101 to 1,000 square units:

• For properties under Category A, Rs. 2-5 is charged.
• For properties under Category B, Rs. 2-4 is charged.
• For properties under Category C, Rs, 1-2 is charged.

The Tax rate for commercial places that are above 1,000 square units:

• For properties under Category A, Rs. 3-6 is charged.
• For properties under Category B, Rs. 2.5-5 is charged.
• For properties under Category C, Rs. 1.5-3 is charged.

The tax rate for Multiplexes and shopping malls:

• For properties under Category A, Rs. 15 is charged.
• For properties under Category B, Rs. 10 is charged.
• For properties under Category C, Rs. 8 is charged.

The tax rate for marriage places and resorts:

• For properties under Category A, Rs. 6 is charged.
• For properties under Category B, Rs. 4 is charged.
• For properties under Category C, Rs. 2 is charged.

The tax rate for hotels and motels up to 5 rooms with a 2-star rating or without a rating:

• For properties under Category A, Rs. 4-6 is charged.
• For properties under Category B, Rs. 3-4 is charged.
• For properties under Category C, Rs.1.5-2 is charged.

The tax rate for hotels and motels up to 16 or more rooms with or without a rating:

• For properties under Category A, Rs. 7-9 is charged.
• For properties under Category B, Rs. 6-8 is charged.
• For properties under Category C, Rs. 5-7 is charged.

Tax rate for manufacturing units, educational institutions and storage godowns that are up to 4,000 yards:

• For properties under Category A, Rs. 5 is charged.
• For properties under Category B, Rs. 4 is charged.
• For properties under Category C, Rs. 3 is charged.

Tax rate for manufacturing units, educational institutions and storage godowns that are more than 4,000 yards:

• For properties under Category A, Rs. 7.5 is charged.
• For properties under Category B, Rs. 6 is charged.
• For properties under Category C, Rs. 4 is charged.

Application Procedure

The application procedure for property tax in Punjab has been specified below:

Step 1: Visit the Center

The applicant has to approach the Municipal Corporation.

Step 2: Obtain the application

He/she has to obtain the application form by paying the appropriate fee.

Step 3: Enter the Details

The applicant has to enter all the required details in the application form.

Step 4: Submit the application

Once all the details are entered, the applicant has to submit the application to the concerned authority.

Step 5: Collect the Challan

After remitting the fee in the fee counter, the applicant receives a challan from the officials. This challan can be used as a proof for paying property tax.

Exemptions

Property taxes are not levied for the following properties:

• All religious institutions, cow shelters, the care centres for stray animals, cremation grounds, historical buildings, old-age homes, orphanages, freedom fighters, BPL (below poverty line) families, ex-servicemen, land and buildings controlled by the municipalities, government hospitals and dispensaries, government-aided schools and colleges, government hospitals and dispensaries, parking lots in multi-storeyed flats and land used for agricultural and horticultural purposes.
• Vacant plots and houses constructed on plots with an area of 50 square yards, single-storeyed residential houses that covers an area up to 125 square yards and flats up to 500 sq feet.
• Newly created Nagar panchayats (the ones that are created before April 2014 and new regions) that are included in municipalities.
• Widows of the state and differently-abled people can avail a property tax refund of Rs. 5,000.
• All educational institutions that are not under the charitable institutions may avail a refund of 50% of property tax.