Chennai: 60% of big properties remain undervalued
Feb 12, 2014
Source : The Times of India


CHENNAI: Corporation of Chennai has been losing crores of rupees due to its failure to revise itsproperty tax structure since 1998 and massive undervaluation of properties by owners.

Already bleeding funds that it receives from the government and from its own revenues in ill-advised projects and through corrupt practices, this in effect means the corporation has little money to improve existing infrastructure in the city or spend on its development.

More than 60% of property owners in the city with built-up area of more than 10,000 sqft have undervalued the property to pay a pittance in tax. As many as 4,919 buildings in the city measure more than 10,000 sqft, official statistics show.

A senior official said the corporation’s revenue department conducted inspections of 2,004 of these buildings so far. The inspections revealed that most owners of large properties have for several years paid just a fraction of the tax they should.

“We found that more than 1,200 buildings measuring more than 10,000 sqft have paid a small amount as property tax for several years,” the official said.

Officials say owners of commercial establishments, residential apartments and government buildings all pay tax based on the corporation’s valuation of 1998 instead of a levy based on the size, location and current value of their properties.

But the corporation is also responsible for low revenues in property tax, officials admit. “The corporation has under-assessed a majority of these buildings and never assessed others, despite a rule stipulating that it should be done once every five years,” a corporation official said.

To make matters worse, has the civic body also regularly falls short of its targeted property tax collections, despite the fact that the owners of properties are required to pay much less than the tax that the actual value of the properties would attract in any other metro in the country.

The number of taxpayers in Chennai increased from 6.5 lakh to 10.82 lakh after the city’s expansion in 2011. But Chennai still has among the lowest property tax collections of all metros.

The corporation mopped up Rs 461 crore of its targeted Rs 500 crore in property tax in fiscal 2012-13. In this financial year, the civic body has so far collected only Rs 303 crore of its targeted Rs 550 crore.

In comparison, Brihanmumbai Municipal Corporation (BMC) collected Rs 3,657.1 crore and Bangalore’s Bruhat Bengaluru Mahanagara Palike (BBMP) Rs 1,368 crore in property tax in 2012-13.

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