It is calculated based on the size and value of the property.
Explanation
Property tax is the primary source of own-revenue for Urban Local Bodies (ULBs), particularly Municipal Corporations. It is a direct tax levied on real estate, including land and buildings. The assessment of this tax is generally based on specific valuation methods such as the Annual Rental Value (ARV), Capital Value System (CVS), or the Unit Area System (UAS).
Statement-wise Analysis
- It is levied as a fixed flat rate for all properties. is Incorrect. Property tax is not levied as a fixed flat rate for all properties. A flat rate would fail to account for disparities in property value, location, and usage. Instead, the tax rate varies based on specific parameters to ensure equity.
- It is calculated based on the size and value of the property. is Correct. The calculation of property tax typically considers the size (carpet area or built-up area) and the value of the property. Other determinants include the location (zone), age of the building, and the nature of usage (residential vs. commercial).
- It is collected exclusively from commercial complexes. is Incorrect. Property tax is not exclusive to commercial complexes. It is applicable to residential, commercial, institutional, and industrial properties, although the tax rates often differ based on the category of usage.
- It is determined and collected directly by the Central Government. is Incorrect. Taxes on lands and buildings fall under the State List (Entry 49) of the Seventh Schedule of the Constitution. The power to levy and collect this tax is delegated to Municipal Corporations by the State Legislature. The Central Government does not determine or collect local property taxes.
Key Takeaway: Property tax is a progressive local tax collected by Municipal Corporations based on the valuation, dimensions, and usage of the property, serving as a critical component of municipal finance.