Backbreaking tax on vacant land in Hyderabad
Jan 14, 2014
Source : The Times of India


HYDERABAD: In a strange twist of logic, the Greater Hyderabad Municipal Corporation (GHMC) imposes more tax on vacant plots than it collects from owners of buildings and other structures.

For instance, a building owner in 300 square yard land in Jubilee Hills has to pay property tax ranging between Rs 5,000 and Rs 10,000 depending on the plinth area, while a plot owner in his vicinity has to cough up Rs 30,000 to Rs 60,000 per annum or more towards vacant land tax (VLT).

As per the GHMC Act, 0.5% of registration value of land could be collected as vacant land tax by the corporation. After a building is constructed on the plot, the owner would have to pay property tax based on assessment. This provision has been incorporated in the Act basically to discourage property owners to keep their plot vacant in a developed area, which would burden the civic body.

Officials admit the VLT has become a major burden on plot owners as the registration and stamps department has been increasing land values from time to time. The government had last year revised land rates to Rs 45,000 per square yard in areas like Prashasan Nagar in Jubilee Hills, Rs 30,000 per sq yard in Madhapur and Rs 20,000 per sq yard in Srinagar Colony.

The high court recently declared that “levying tax on vacant land other than the land appurtenant to the buildings as provided under Section 212 (2) of the Act is ultra vires, unauthorised and illegal.” These remarks were made in a case in which the corporation tried to collect tax even after building permission was taken. The court also pointed out that there was no mention of VLT. GHMC renamed VLT as Property Tax (on land) a month ago since there was nomenclature separately for VLT in the Act.

As per GHMC records, VLT is being collected from 1,600 property owners in all the circles every year. While 400 owners of vacant land are in Circle 10 areas like Banjara Hills and Jubilee Hills, 385 are in Serlingampally circle, 80 each in Kukatpally and Rajendranagar circles and 40 in Kapra circle. Of them, only about 500 owners have been paying tax regularly.

Though there are thousands of vacant plots in Greater Hyderabad limits, officials claim it is not possible to identify owners and issue notices to them demanding tax . As a result, the corporation has been collecting VLT from property owners when they approach the civic body for building permissions.

In 2012-13 fiscal, the GHMC town planning wing collected about Rs 17 crore VLT apart from building fee, betterment charges, impact fee and other charges from 12,000 building permission applicants. Similarly, Rs 19 crore has been collected till date in the current financial year from 9,000 applicants, mainly due to increase in land values.

When the government had proposed hike in government land values last year, the GHMC standing committee members had sent a proposal to reduce vacant land tax from 0.50% to 0.25% since it would be a burden on the people. There was also a suggestion from the standing committee members that if the VLT was reduced, property owners might voluntarily come forward to pay tax, official sources said.



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