If you’re a property owner in India or planning to buy real estate soon, understanding Property Tax (also known as House Tax or Holding Tax) is essential. This blog is your go-to guide for everything related to property tax—why it’s important, how it’s calculated, exemptions, and how to find your Unique Property ID (UPIC) for online payments.
What is Property or House Tax?
Property Tax is a direct tax levied by the government on real estate, which includes residential houses, commercial buildings, land, and rented properties. It is usually collected by Municipal Corporations or Urban Local Bodies (ULBs) annually.
Key Highlights:
• It is an ad valorem tax, meaning it’s based on the value of the property
• The rate may be expressed as a percentage or millage (per thousand of currency units)
• It applies to both residential and commercial properties
• It can be collected annually or during real estate transactions
Also known as Holding Tax or House Tax, it contributes significantly to city-level infrastructure and amenities.
Why Do We Pay Property Tax in India?
Property tax is one of the primary revenue sources for local governing bodies like municipal corporations. Here’s how the tax is used:
• Maintenance of roads, drainage, and streetlights
• Funding sanitation services, garbage collection, and public toilets
• Operation of water supply systems and sewage management
• Urban development projects like parks, flyovers, and community centers
Paying this tax is crucial to keep your locality functioning efficiently and to avoid penalties or legal trouble.
Unique Property ID (UPIC) for Property Tax Payment
To pay your property tax online, you need a 15-digit Unique Property Identification Code (UPIC). This is a government-issued identifier for each property under a municipality.
• If you own multiple properties, each one will have its own UPIC
• You can find this ID on your previous tax receipts or by visiting your municipal office
• Municipalities have started issuing UPIC Cards for ease of identification and service access
Property Tax Exemptions in India – Who Is Eligible?
Under Section 24 of the Indian Constitution, the following exemptions may apply:
• Non-residing loan-takers: If you’ve taken a loan for a property you don’t reside in, you may be exempted from the entire interest component
• Job-related non-occupancy: If you live elsewhere for work and rent/purchase a new house, you may claim up to ₹2 lakh in interest exemption
• Construction delay: If your house isn’t completed within 3 years of loan sanction, your exemption drops from ₹2 lakh to ₹30,000
• Documentation required: Maintain interest certificates from your lending institution for tax filing purposes
How is Property Tax Calculated?
Property tax varies across cities and is based on the location, size, usage, and construction type of the property. The general formula is:
Property Tax = Base Value × Built-up Area × Age Factor × Type of Building × Category of Use × Floor Factor
Other Methods Used by Municipalities to Calculate Property Tax
1. Capital Value System (CVS)
• Based on a percentage of the market value
• Used in: Mumbai
2. Unit Area Value System (UAS)
• Based on the per-unit price of property by area, usage, and location
• Used in: Delhi, Bengaluru, Pune, Hyderabad, Kolkata
3. Annual Rental Value System (RVS)
• Based on the expected rental value of the property
• Used in: Chennai, parts of Hyderabad
Summary: Why Property Tax Matters in 2025
• Keeps your locality livable and clean
• Funds essential public utilities and emergency services
• Helps in urban planning and development
• Protects your property ownership under government records
• Timely payment helps avoid penalties and ensures peace of mind
Frequently Asked Questions (FAQs)
Q: What is the difference between Property Tax and Holding Tax?
Property Tax and Holding Tax are essentially the same in India. “Holding Tax” is a term more commonly used in states like Odisha and Bihar.
Q: How often do I need to pay property tax?
In most cities, property tax is paid annually, but some municipalities may allow half-yearly or quarterly payments.
Q: Can I pay my Property Tax online?
Yes, most municipal corporations offer online portals where you can pay using your Unique Property ID.
Q: What happens if I miss the payment deadline?
Late payments often attract penalties or interest charges, which vary by municipality. You may also face legal notices or restrictions on property services.
Q: Is property tax applicable to rented property?
Yes, property owners must pay tax regardless of whether the property is self-occupied or rented.
Q: How can I find my Property Unique ID (UPIC)?
You can check your previous tax receipts or contact your local municipal office. Some cities also offer UPIC lookup online.
Q: Are there exemptions for senior citizens or disabled persons?
Yes, some municipalities offer partial or full exemption to senior citizens, disabled individuals, or ex-servicemen, depending on local rules.