Property Tax Calculation - Unit Area System (Hindi) - YouTube

Subscribe to the Asset Yogi channel and press the bell icon

To watch the latest finance videos first

Namashkar, my name is Mukul and welcome to Asset Yogi

Where we unlock the knowledge of finance and real estate

Many people have questions related to the property tax

I also realised during the research that the answers to these questions are not easily available on the internet

So I decided to make a series on it.

How property tax is calculated and what are its methods?

How you can pay the property tax in your city online?

and we'll also see that how you can claim the rebates

So basically, if you live within municipal limits or city

Then state government collect the property tax through the municipal corporation

for the maintenance of roads, sewage system, garbage disposal system

or other civic amenities that municipal corporation provides

and collect the funds mainly through property tax

Paying property tax is important because if you will not pay it

then the municipal corporation or state government has a charge on your property which is also called encumbrance

Because of that, you may face problems while selling your property

You cannot sell your property without clearing the property tax dues

And if you want to take loan on your property,

then also, the bank ask you to clear the due property tax first

So this was about the concept of property tax

Now let's see the calculations of the property tax

This is also very complex and many people don't get this concept

So the calculation of the property tax is done mainly through 3 methods

We'll cover each method in different videos

In this video, we'll understand the Unit Area System

which is already implemented in many cities

Like in Delhi, Patna, Ahmedabad, Bengaluru, Kolkata

So this is a modern system which is adopted by many cities

Now let's see how the calculation for property tax is done and what is its benefit

So let's understand how property tax is calculated through the unit area system

Under the unit area system, a city is divided into categories as per living standard

So under the highest category, posh areas come and poor neighbourhoods under the lowest category

where the property tax value is less

For example, category A includes posh areas

Let me write here

and there are 8 categories A to H

So H category may include a poor neighbourhood and the property tax value will be less in that case

A Unit Area Value (UAV) is assigned to each category

UAV system is already applied in Delhi, Bengaluru, Kolkata, Ahemdabad, and Patna

Many cities have already updated it

And in many cities, there is Capital Value System or Annual Rental Value System

Unit area system is a modern method

And the biggest advantage in this is, it is not dependent on the market or rental value

In the capital value system, you need to assist the market value of the property

and in the annual rental system, you need to assist the rental value

which can fluctuate and with that

many people misuse it and do not assist the value properly

So in unit area system, because UAV is fixed by the government

It is a fair assessment of your property tax

And it basically depends on your location, age of the property, and type of property

Now let's understand it through an example

Let's take the example of Delhi. So what is the formula of property tax calculation in Delhi

The annual value of your property is calculated

The formula is Covered area x UAV x Age factor x Use factor x Structure factor x Occupancy factor

So when the annual value is calculated, you calculate the demand of the property tax

For which you multiply Annual value by the tax rate

The tax rate depends on the category and the type of property

Whether it is residential, commercial, or industrial

So once the tax demand is calculated, some rebates are applicable

and you can subtract the rebates from the tax demand

For example, there are rebates for women, if you pay property tax on time then there is a rebate

If you have a residential property then there is a debate

So it depends. The factors and rebates may be different for different cities

But broadly, the formula is the same

and the unitary system is operated like this

So lets take the example of Delhi and see what are the different factors

So there are 8 categories in Delhi. Category A to H.

So the category A includes posh areas and category H includes the lowest category areas

And UAV is given here according to that per sq. mt.

So the UAV is highest in category A which is 630

and the lowest in category H which is 100

So the age factor is given like this

The age factor of the construction before 1960 is 0.5

and the age factor of the construction after 2000 is 1.

Then how is the Use factor determined?

1 for residential property, 1 for the non-residential public purpose

2 for public utility, which is directly doubled

3 for industry, entertainment and clubs

4 for restaurants and hotels and

10 for 3 star and above hotels

So a much difference is there on the basis of use of property

Structure factor.

Especially in Delhi, most of the buildings are Pucca

and there are very less options of Semi-Pucca and Kuchcha

So 0.5 factor is there in Kuchcha but

in a city like Delhi, you will not see many Kuchcha properties

Now if we talk about the occupancy factor

1 factor for Self occupied

If you've Rented out, then its 2

Even if your residential plot is barren, you have to pay the property tax

So 0.6 factor is in that case

So let's select an example.

Let's say we have a residential flat

So let's say the UAV becomes 320

And let's consider the year of construction after 2000

So age factor is 1

Since it is a residential flat, the use factor is 1

And since it is a pucca property, so structure factor is also 1

And let's assume it to be self occupied and not rented

So let's take this also 1 for the example

So for the annual value, let's assume the covered area as 80 sq. metre

I already made videos on the covered area

In Delhi, we call it covered area but in other cities, it can be called carpet area, plinth area, or build-up area

All these areas are different

I already made separate videos on these so you can watch those videos also

If you want to know about the carpet area then it's there

What is a build-up area, plinth area, covered area?

Examples are given for all these

But the important point is that from where do we get this area?

You'll get it in your property documents

Either in the sale deed or in the property tax receipts

We already saw UAV. It depends on the category which is 320 in our case

We considered the age factor, use factor, structure factor, and the occupancy factor as 1

So how much will be the value?

80 sq. mt. x 320 per sq. mt. x 1 x 1 x 1 x 1

All these are the multiplying factors

So now the total annual value came out is Rs 25600

Now we have to see the property tax rate

So I got this chart from the website of MCD

Property tax is given category wise

Taxes for residential, commercial, and industrial properties are different

In the case of residential property, it varies from 7% to 12% category wise

Fixed 20% for commercial property

And in the case of industrial property, it varies from 10% to 15% category wise

So our category is a residential property which is category D

So the rate in our case is 11%

So now how will we calculate the tax demand?

Annual value (25600) x 11%

So the total value came out is 2816

So the tax demand is 2816

After this, we have to find out the rebates

So if we talk about Delhi, what all rebates are applicable?

30% rebate is given for senior citizens, women, and physically challenged people

If you do a lump sum payment of your property tax in advance before 30th June of any financial year

Then you get an additional discount of 15%

If you live in a flat of DDA or Cooperative Group Housing Society

whose covered area is less than 100 sq. mt. then you get an additional discount of 20%

Now let's see how this calculation will be done

So let's say this flat is in the name of a woman then how the calculation will be done

Tax demand is 2816 - rebate which is (0.3) x 2816

So how much is the value?

It came out 1971

So basically, subtract 30% rebate from 2816 for women

It is the same for a senior citizen also but if it is a case of a senior citizen woman

then will not become 60% and it will remain 30%

Now let's consider that we'll pay it before 30th June

So how much will be our lump sum rebate?

It will be calculated on 1971

So it will be 0.15 x 1971

and its value will be 394

Now let's say that this is a flat of CGHS which is less than 100 sq. mt.

So how much will be the rebate of CGHS?

It will be calculated on 1971.

So it will be 20% of 1971 and how much will be this value?

It will be 394 and this value is 296

So these 2 values will get subtracted. You'll subtract these from 1971

So your property tax payable will be 1281

So in this way, the property tax calculation is done under the unit area system

As I already told that these factors may be different in different cities

Instead of covered area, it can be carpet area or build up area

or it can be plinth area

And all the other things are as it is

Rebates can also be different in different cities

Categories may differ. Here we have 8 categories but in any city, it may be 5, 6, or 7

And the rate of tax may also be different

But broadly, the system is operated like this.

That's it in this video

If you liked this video then do like and share it

If you have any suggestions or you want to give any feedback related to this video or channel

Then you can comment down below

I share such finance and investment-related interesting topics on this channel

So if you haven't subscribed to this channel yet then subscribe to it and press the bell icon

So that you get the notification of my latest video.

So we'll meet in the next video

Till then keep learning, keep earning, and stay happy.