Be prepared to shell out more under property tax
May 10, 2014
Source : The Times of India


NAGPUR: With municipal and general elections over, the BJP-led ruling alliance at the Nagpur Municipal Corporation (NMC) has resumed the process to implement the capital value-based property tax system. The property tax for residential properties will increase up to two times while it will be three times for commercial properties.

The new tax system, or revised tax, is likely to come into effect from October 1 or next the fiscal. After getting approval from the tax consultative committee, the property tax department has tabled the proposal before the standing committee for approval. Then, the proposal will be tabled for the general body's consent and finally for the state government's nod. Therefore, the revised tax will not be reflected in first six-monthly property tax bill.

In 2010-11, the then standing committee chairman Sandip Joshi had proposed to implement the new tax system. It was reportedly delayed due to municipal election in 2012 and then the general election in 2014.

In the new tax system, the property tax will increase to a great extent as it is based on capital value of the properties. The capital value will be derived from the ready-reckoner rates fixed by the state government in January every year.

NMC sources told TOI that the property tax of residential and commercial properties can also go up two-three times due to lack of cap system. "In the proposal the property tax department has proposed to introduce three types of new taxes in property tax including sewage benefit tax, water benefit tax and road tax. Besides, the general tax has been proposed to hike from existing 12-20% to 14-30%," the sources said.

In the new system, the minimum property tax has been fixed at Rs500 per annum. This will impact those residing in slums.

However, the property tax of rented properties is likely to be reduced in the new system. In the existing system, the owners or tenants are paying tax equivalent to half of annual rent due to some flaws. However, the NMC had charged this as there are very few rented properties and that too from the last couple of years.

The taxpayers paying more property tax for not having the NMC's water connection in their houses have something to cheer. In the existing system, the NMC was recovering 40% water tax of total general tax from such taxpayers. Now, the department has proposed to reduce the water tax to 15%.

Chairman of tax consultative committee Girish Deshmukh told TOI property tax of properties constructed 25 years ago and had reassessed will not increased to a great extent. "The new tax system is on the lines of that exists in the Pune Municipal Corporation. It is actually a combination of ready reckoner and annual letting value systems. Areas of the city have been given six different categories. The tax of properties situated in prime locations will increase in case charged low tax in existing system. The new system will bring transparency," he said.

NMC sources added that the ruling alliance was forced to go for a new system due to less revenue coming from property tax. "Property tax was not increased in the city from 2000. Even reassessment of all existing properties has not been done. NMC is getting revenue of Rs 180 crore per annum while Pune is recovering Rs700 crore per annum. New tax system can also be revised every year," the sources said.

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