Non housing properties: New tax rules from today
Apr 01, 2014
Source : The Times of India
LUCKNOW: In a major relief to around 1.5 lakh non-housing properties in city, the state government has given its approval for implementation of new house tax assessment rules pertaining to them. These would be applicable this financial year onwards. Lucknow Municipal Corporation claims that after implementation of new rules, the commercial properties taxes would come down by almost 50-60%.

Unlike earlier when commercial house taxes were based on a certain percentage of the property's capital cost, the tax would now be calculated after self-evaluation of its residential value and then multiplying it with number of times, maximum up to six, depending on the category. The non-housing properties have been divided into 10 categories.

In the previous format, house tax on non-housing units was calculated by multiplying the property's capital cost (sum of the land cost which appreciates yearly) and the cost of construction which depreciates on a yearly basis by 7 and then taking out 15% of the total value. Land cost is determined by district magistrate's circle rate while the cost of construction is decided by the scheduled PWD rate of that area.

When LMC introduced these rules in 2002, many commercial property owners protested and some even filed WRIT petition in the court. They claimed that it was too much a financial burden on them as the capital cost would increase every year and so also would their tax liability. Most of them boycotted tax payment to the corporation alleging that it doesn't have a fair system of assessment.

The discrepancies in the tax assessment of non housing properties have led to LMC losing around Rs 100 crore in taxes every year. Municipal commissioner RK Singh said after new rules are implemented, tax burden on property owners will reduce by almost 50%. "This will encourage defaulters to come forward and clear their dues." He added that if all non-housing properties adhere to the new rule and pay taxes regularly, LMC can generate additional Rs 100 crore every year.


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