J&K Property Tax rules notified; this is how much you pay on houses and land

Srinagar, Feb 21: The official notification for the implementation of Property Tax in J&K have been issued today, 21st February by the Housing and the Urban Development Department.

According to the notification, a copy of which has been obtained by Ziraat Times, the tax will be applicable from 1st of April, 2023 and will be calculated on housing and residential properties, including lands attached to properties.

How will the property tax be calculated?

The property tax will be calculated based on a formula which will be a multiple of several factors like the circle rates of land, number of floors and floor area of houses and the total area of the garden/land compound of houses. Same would be the case with commercial properties as well.

In dffect, Property Tax on residential property will be 5% of Taxable Annual Value (TAV) while on non-residential property it will be 6% of Taxable Annual Value (TAV).

The Taxable Annual Value (TAV) will be a multiple of

= MTF x LVF x ARF x FF x UTF x CTF x AGF x SF x OSF

Where MTF is Municipality Type Factor, LVF is Land Value Factor ( It is one tenth of the unit area value of land in Rs lakh per kanal of land as notified under J&K Preparation and Revision of Market Value Guideline Rules, 2011 as on 1st April of the base year of that block of three years. e.g. for the first block from 1st April, 2023 to 31st March, 2026, if the per kanal value of land as on 1st April, 2023 as per the aforementioned value guidelines is Rs 60 lakh, it be entered as 6 in the above calculation and shall continue to be entered as 6 during the three financial years of the block)

ARF is the Area Factor (It is the built area or the vacant area in respect of which the tax liability is being calculated, as the case may be, in square feet. In the case of Property tax on built area, it refers to the total covered area of that floor in square feet. In case of areas with winter snowfall, the area of the attic shall not be counted in built-up area. In the case of Property tax on vacant land not appurtenant to a building, the area of the vacant land in square feet shall be entered. In the case of Property tax on vacant land appurtenant to a building, the area to be entered in the formula shall be the area, in square feet, in excess of two times the built-up area of the ground floor)

FF is floor factor (For calculating the liability of different floors and vacant land abutting the building, the floor factor shall be entered in the formula separately for residential buildings including flats and other buildings.

In other words the tax will be paid for all floors and gardens in use for the houses.

Will it be applicable to new buildings?

Yes. New buildings coming up after the commencement of the block shall have their property tax liability calculated with reference to the 1st day of the relevant block, and irrespective of their having completed three years, their liability to tax shall be calculated anew from the date of commencement of the new block of three years for the Corporation as a whole.

Also, where a building is liable to property tax for only a part of the year, the tax due shall be proportional to the number of completed months and parts of month not completed shall be ignored.

Are we required to file details after payment of the tax?

A person liable to property tax shall furnish to the Executive Officer or any officer authorized by him in this behalf the particulars of the property and the tax due thereon in Form-1 by 30th May of the financial year to which the return pertains. It shall be accompanied by a proof of payment in Form-2.

Acknowledgment of filing of return shall be in Form-3. A copy of the acknowledgment along with the proof of payment of the second installment of tax shall be furnished by 30th November in cases where the payment is made in two installments.

Is there a penalty involved if the tax is not paid in time? 

Failure to file return in due time, unless prevented by sufficient cause, shall, without prejudice to the interest due for delay in payment, make the person from whom it is due liable to a penalty of Rs 100/- or 1% of the tax due, whichever is higher, for every month of default. The maximum penalty shall not exceed Rs 1000/-.

Will there be inspections involved if the tax is paid correctly?

The notice in terms of the date of inspection shall, unless there are reasons to recorded in writing for giving a shorter notice, not be less than 14 days from the date of notice.

The notice in terms shall be in Form-5 clearly mentioning the liability of property tax proposed to be determined and the basis thereof, and the date of hearing shall, unless there are reasons to recorded in writing for giving a shorter notice, not be less than 21 days from the date of notice.

For how long will the same tax be applicable?

The property tax calculated in respect of a building shall hold for a block of three years unless any change to such calculation is necessitated on account of the circumstances envisaged in the Act for allowing revision in such calculation. The first block shall commence from 1st April 2023, and shall continue to remain in force till 31st March 2026. The blocks shall be similarly calculated thereafter.