Following the recent green signal by the Punjab cabinet to impose property tax in the state, the state government has reduced the rates of property tax announced earlier and has also disclosed the formula, enabling people to assess the tax.
A government spokesperson on Tuesday said the new rates would come into effect after the ordinance expected in the near future.
Disclosing the formula of the annual value of property on which tax would be imposed, the government spokesperson said if a person had a 200-square yard plot with Rs. 20 lakh as the collector rate and 100-square yard of constructed area, he would have to pay Rs. 600 as annual tax.
To calculate the property tax, the collector rates will be added to the construction area cost. Rs. 500 per square foot has been fixed as the construction area cost. The spokesman said 10% would be reduced as depreciation charges from the total cost, including the construction area cost, and 5% of the actual obtained amount would be considered as annual value of the property. It was revealed that 0.5% tax would be levied on the annual value of the property.
Collector rate of property plus construction cost (Rs 500 per square foot on covered area) minus depreciation (10% of construction cost) equals the total cost.
5% of total cost will be considered as annual cost and 0.5% property tax will be imposed on the annual cost.
5% collector rate of vacant plot is its annual value and 0.5% tax will be imposed on the annual value.
7.5% of the annual value on rented residential property and 10% of the annual value on rented commercial and industrial property.
Rates have been reduced from 15% of the annual rental value on commercial rented property to 10%, and on residential rented property from 10% to 7.5%.
Non-rented commercial property
Rates have been reduced from 15% to 3% of the annual value.
For self-occupied houses up to 50 square yards, a consolidated sum of Rs. 50 per year will be charged. For houses between 50 and 100 square yards, an annual consolidated tax of Rs. 150 will be charged.
With an area of 100 to 500 square yards, the property tax at the rate of 0.5% of the annual value. Self-occupied houses above 500 square yards, a tax at the rate of 1% of the annual value.
The property tax will be at the rate of 0.2% of the annual value.
Exempted from tax
Religious institutions, cow shelters, care centres for stray animals and charitable institutions, people below poverty line and freedom fighters. Widows and differently-abled persons get a rebate of up to Rs. 5,000 in the property tax.