Land holding tax to go up in Bhubaneswar
Jun 20, 2012
Source : The Times Of India

 

BHUBANESWAR: The June 16 Odisha cabinet decision to increase land valuation by general administration (GA) department in the city to match the benchmark valuation of revenue department would result in substantial increase in holding tax burden on state capital residents.
 
The Naveen cabinet asked the GA department to revise the land cost at par with the rate decided by the revenue department in Bhubaneswar Municipal Corporation (BMC) areas. Currently the GA department, which manages government land in Bhubaneswar and administers government residential and non-residential estates and buildings located at Bhubaneswar and Cuttack, has value the land much lower than the price ascertained by the revenue department. The rate of GA department land, which was last revised in 2009, would go up by around 30 to 50 per cent to match the revenue department rate, sources said.
 
While calculating holding tax @ 17.5 per cent annual value of a property, BMC takes into account the GA department's December 31, 2009 notification for the land value. The BMC adds construction cost with 0.5 per cent of the land cost and computes 7.5 per cent as the annual value of a property. With the increase in land value, the holding tax will automatically go up.
 
Currently, benchmark value for an acre of land in prime localities in the city comes around Rs 11 crore, as per the revenue department calculation. However, the GA department's value per acre land in the same locality, which is used to calculate holding tax, is around Rs 7 crore.
 
BMC authorities said the "marginal" increase will strengthen BMC's financial health. "Holding tax is the major source of revenue for BMC. Marginal increase in the tax by way of increased land valuation will help the civic body to earn some extra revenue to create better civic amenities," said mayor Anant Narayan Jena.
 
Besides holding tax, the government will stand to gain in revenue in two more ways by increasing the GA land value. Firstly, the government would get direct revenue from enhanced premium. Secondly, the registration fees will go up accordingly.
 
The GA department allots land to industries, corporates, non-governmental organizations besides other government agencies. Officials said the government step is in sync with recommendation of an expert committee on revenue enhancement measures under the chairmanship of former state election commissioner Sanjib Chandra Hota in 2011.
 
"It was brought to the notice of the committee that market price of land in a particular area is at variance with the price of government land which is substantially lower. Such variance should be done away with," the Hota panel report had observed.
 
"There is competition for allotment of land in favour of companies for office establishment and builders for construction of commercial and residential complexes, etc. The committee feels that if there were open auction of such lands, government would be able to extract good amount of revenue," the report had further added.

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