Explained: How collector rates, floor factor will determine your property tax in Haryana

For example, suppose a residential house has a plot area of 200 square metres, the applicable collector rate is Rs 50,000 per square metre, and the house has only one floor. In this case, the capital value would be calculated as follows:

Capital Value = 200 × Rs 50,000 × 1 = Rs 1 crore

Here, the floor factor is important. Where only the ground floor is constructed, the floor factor will be 1. For every additional floor constructed, including a basement, an additional floor factor of .25 will be taken.

Thus, if the property has only the ground floor, the floor factor will be 1. If it has a ground floor plus one additional floor, the floor factor will be 1.25. For a ground floor plus two additional floors, it will be 1.50, and for a ground floor plus three additional floors, it will be 1.75.

A basement is also treated as an additional floor for this purpose and carries an additional floor factor of .25. Therefore, if a property has a ground floor and a basement, the floor factor will be calculated as 1 + .25 = 1.25.

How will the capital value of flats be calculated?

For an apartment or flat, a different formula has been prescribed. The capital value will be calculated on the basis of the carpet area and the applicable collector rate.

The formula is:

Capital Value = Carpet Area × Collector Rate

Therefore, unlike a residential house, the calculation for a flat does not use the plot area multiplied by a floor factor.

For example, if a flat has a carpet area of 100 square metres and the collector rate is Rs 50,000 per square metre, its capital value would be:

100 × Rs 50,000 = Rs 50 lakh

How will the capital value of an independent floor be calculated?

Independent floors have a separate formula for determining their capital value. In such cases, the capital value will be calculated as:

Capital Value = Plot Area × Collector Rate

Thus, for an independent floor, the calculation is based on the plot area and collector rate, without applying the floor factor used for an ordinary residential house.

How will the property tax be determined?

Once the capital value of the property has been calculated, the applicable property-tax rate will be applied to that capital value.

The notification prescribes different annual property-tax rates for residential and non-residential properties depending on the municipal category.

For residential properties, the rate is .030 per cent for A1 municipal areas (Gurgaon, Faridabad and Manesar) and .029 per cent for A2 municipal areas. For non-residential properties, the rate is .10 per cent for A1 municipal areas and .09 per cent for A2 municipal areas.

Therefore, the applicable rate depends both on the nature of the property and on whether the municipal area falls under category A1 or A2.

What usage factor will apply to an ordinary residential property?

Apart from the property-tax rate, a usage-based multiplication factor is also applied. For ordinary residential properties, this factor depends upon the plot size.

For a residential property with a plot area of up to 50 square metres, the usage factor is .25. Where the plot area is more than 50 square metres but up to 100 square metres, the factor is .50. Where the plot area is more than 100 square metres but up to 200 square metres, the factor is .75. For other residential properties, the usage factor is 1.

This means that smaller residential properties have a lower usage factor, which reduces the final amount of property tax payable.

How will the final property-tax calculation work?

Let us take an example of a residential house situated in an A1 city. Suppose the plot area is 100 square metres, the collector rate is Rs 50,000 per square metre, and only the ground floor has been constructed.

The first step is to calculate the capital value. Since only the ground floor has been constructed, the floor factor is 1.

Therefore:

Capital Value = 100 × Rs 50,000 × 1 = Rs 50,00,000

The second step is to apply the applicable property-tax rate. Since this is a residential property in an A1 municipal area, the rate is .030 per cent.

Therefore:

Rs 50,00,000 × .030 = Rs 1,500

The third step is to apply the usage factor. Since the plot area is 100 square metres, it falls in the category of more than 50 square metres to 100 square metres, for which the usage factor is .50.

Therefore:

Rs 1,500 × .50 = Rs 750

Thus, in this example, the final property tax would be Rs 750 per year, provided that the municipality has not fixed a different rate within the permitted range.

What is the maximum rate of property tax that a municipality can fix?

The July 30 notification provides that the maximum rate shall be three times the floor rate. In simple terms, the rates mentioned in the notification are the minimum or floor rates, while a municipality can fix a rate up to three times that floor rate. Until the municipality fixes its own rate, the minimum rate will continue to apply.

For example, for an A1 residential property, the floor rate is .030 per cent.

The maximum possible rate would therefore be:

.030 per cent × 3 = .090 per cent

Thus, an A1 municipality can fix a residential property-tax rate anywhere up to .090 per cent, subject to the provisions of the notification. If no different rate is fixed by the municipality, the floor rate of .030 per cent will apply.

What is the annual cap on increase in property tax?

The new formula may result in a higher property-tax liability. However, the government has prescribed a limit on the annual increase in property tax during the transition to the revised tax amount. The applicable limit depends on the size and type of the residential property.

For a house measuring up to 250 square metres, the annual property tax cannot increase beyond 1.25 times the existing annual tax. Similarly, for a flat measuring up to 100 square metres, the annual tax is capped at 1.25 times the existing annual tax during the transition period.

For a house measuring more than 250 square metres and up to 350 square metres, the annual property tax can increase up to 1.5 times the existing annual tax. For other residential properties, the annual increase can be up to two times the existing annual tax.

What does the government claim?

According to government officials, the new system is expected to make the property-tax regime across Haryana’s Urban Local Bodies more transparent, equitable and citizen-friendly, while also strengthening the revenue base of municipalities to support better civic services and infrastructure. Officials say the new system replaces the property-tax rules introduced in 2013 and establishes a uniform method of calculating property tax across all Urban Local Bodies.

Sonipat Mayor and BJP leader Rajiv Jain said property tax is one of the primary sources of revenue for municipal bodies and is necessary to generate the funds required for carrying out developmental works and providing civic amenities in cities.

Opposition to the new tax formula

The Congress has opposed the new property-tax formula, arguing that it could increase the financial burden on property owners, particularly because the revised system links the determination of property tax to collector rates. Congress leaders contend that since collector rates are likely to increase periodically, linking property tax to these rates could result in a corresponding increase in property-tax liability in the future.