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Property tax revision on the anvil in municipalities
December, 25th 2014

Residents of newly-created nagar panchayats and municipalities will need to cough up more property tax from the next financial year, i.e April 1, 2015. The residents of nagar panchayats including Medchal, Ibrahimpatnam, Pedda Amberpet and Badangpet have to pay more taxes along with other municipalities, two municipal corporations and gram panchayats that were merged with municipalities.

The municipal administration and urban development department is also considering increasing the tax every year instead of five years (revision) by two to three per cent. But this, however, will require an amendment to the municipalities Act.

The commissioner and director of municipal administration (CDMA) has asked 32 nagar panchayats, municipalities and two corporations -- Khammam and Warangal -- where the tax has not been revised for the past one decade in the state to complete the process by next financial year. The revision exercise began after the state government cleared the proposal recently.

The commissioners of the civic bodies have been asked to divide their jurisdictions into zones and conduct survey of prevailing rental values of 20% of rented buildings of all categories such as residential, commercial, offices, hospitals, educational institutions, hotels, lodges, cinema theatres and industries and workshops. The categories have been further divided into posh, ordinary, tiled, terrace and others based on the type of construction and location.

Officials said once the draft of annual rental value and proposed tax rates per sq metre of plinth area is prepared, it would be placed before the Property Tax Board to be headed by commissioner of municipal administration. The draft notification would be published inviting objections and suggestions from the general public and final tax notification is expected to be published on January 31, 2015 and individual demand notices will be served to the tax payers in the month of February and March.

The municipal administration department officials said tax revision has not been taken up in the newly-formed municipalities since their creation and the residents have been paying taxes as per the old rates fixed in 2007. As per the municipalities Act and other rules, property tax should be revised every five years as the tax revenue is the only source for the civic bodies. In many nagar panchayats and municipalities, the tax is very meager and even that is not being paid by many residents.

"The total collection of property tax in the state barring GHMC, is about Rs 300 crore which comes to about 84% of the total tax demand. Nearly 60% of the municipalities are not in a position to pay electricity charges, take up sanitation and civic amenities in their areas," commissioner of municipal administration B Janardhan Reddy told TOI.

Until now, the commissioner said, the property tax is being collected in several municipalities without conducting a scientific survey of property except some corporations like GHMC. For the first time, a survey of annual rental value is being taken up even in smaller municipalities.

Meanwhile, the department is also proposing to amend the municipalities Act, facilitating tax hike by two to three per cent on the existing amount. "Instead of imposing sudden burden on the tax payers by raising tax by 10% to 20% every five years, the same can be distributed over a period of five years by increasing annually," an official of CDMA said.

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