Making a statement under Rule 300 in the State Assembly on Friday, the Minister for Local Administration, Mr Paloli Mohamed Kutty, said that there had been no revision of the tax structure since 1993 and this had caused huge loss to the local bodies. Till now, the tax was determined as a fixed percentage of the annual rent a building could fetch to the owner.

But since there were no clear-cut guidelines in this regard, there had been complaints about the method, the Minister said.

The revision of the tax structure based on floor area had been made in line with the recommendations of the Sen Committee, which was appointed by the Left Democratic Front (LDF) Government to suggest administrative reforms following the decentralisation of governance.

The Minister said that there would not be much of a hike in the tax for ordinary people under the new dispensation. However, the tax rate would go up in accordance with the size and opulence of the house.

The tax will be determined at a fixed rate per square metre. Besides, the zone where the building is located, road connectivity, the size of the building, the roof, the type of the floor and walls and the age of the building will be taken into consideration while calculating the tax.

There will be varying rates for rural, municipal and corporation areas. In panchayats, the rate will be from Rs 3 to Rs 8 per square metre, while it will be between Rs 6 and Rs 15 in municipalities. In corporations, the rate will be between Rs 8 and Rs 20 per square metre.

In the initial phase, the rates will be Rs 3 to Rs 5, Rs 6 to Rs 8 and Rs 8 to Rs 12 in panchayats, municipalities and corporations respectively.

The huts of poor people, the houses under the EMS Housing Project and those houses made available from Scheduled Castes, Scheduled Tribes and Fisheries Departments have been exempted from tax. Also, houses with a floor area up to 30 square metres will not attract tax.

The new tax structure will come into force in the current financial year, the Minister said.