Property Tax and Assessment News From Around the World- For Information Purposes Only. INDIA What s Inside February 2014

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1 INDIA What s Inside February 2014 Ahmedabad Municipal Corporation extends incentive scheme for tax defaulters Secunderabad Cantonment Board to crack down on property tax defaulters No change in property tax Chennai corporation loses big bucks: 60% of big properties remain undervalued Mangalore: Brace up for property tax hike from April 1 Nagpur Municipal Corporation to bring all properties under tax purview Self-assessment of Property Tax to Go Online Soon Bangalore: Property tax to double in IT-BT corridor GHMC to crack down on property tax defaulters Soon, all properties to be on Geographic Information System (GIS) map to help in tax collection Band, baaja, tax: Defaulters face music AHMEDABAD MUNICIPAL CORPORATION EXTENDS INCENTIVE SCHEME FOR TAX DEFAULTERS Ahmedabad Municipal Corporation (AMC) has decided to extend the incentive scheme for tax defaulters till March 31. The decision to extend the scheme was taken after the AMC recovered Rs crore as property tax after announcing incentives on interest for those who had not paid their property taxes. The civic body had launched the incentive scheme to recover pending taxes, said officials. The AMC had announced that, from December 1, 2013 to January 31, 2014, 70% rebate in interest would be given for those defaulters (in the residential category) who had paid according to the new property tax formula. The new formula, which is based on the carpet area of a property, had come into force in early AMC officials said that those who had pending dues before 2000 were given 100% rebate in interest. The AMC had also announced 50% waiver in interest for commercial property owners who had defaulted in payments. During the two months in which the scheme was available, the civic body recovered Rs crore from the 2,38,715 property owners. Officials said that against the collection of Rs crore as on January 31, 2013, this year the AMC has recovered Rs crore which was Rs crore more than last year. IPTI Xtracts Page 1

2 SECUNDERABAD CANTONMENT BOARD TO CRACK DOWN ON PROPERTY TAX DEFAULTERS Cracking the whip on property tax defaulters, the Secunderabad Cantonment Board (SCB) has decided to serve 'form of warrants' on 50 property owners for tax arrears. If they fail to clear the property tax dues, the SCB authorities may attach their properties. For the first time in the civic body's history, SCB authorities would serve warrants (green) on property tax defaulters to attach their movable and immovable properties. "We have served notices (red) on owners of nearly 40,000 properties, including domestic and commercial, demanding payment of property tax for and also arrears in December last. We have given a month's time to pay arrears," a senior SCB tax department official told STOI. Responding to the notices, most property owners paid the tax. As a result, the SCB's revenue has gone up to Rs 12 crore (till this month) from Rs 9.07 crore (last year revenue). "As per our records, over 2,000 property owners have not responded to the red notice. Now, we have decided to serve form of warrants under section 101 of the Cantonment Act, 2006, on these property owners," said the official. The process of serving green notices would start from February 3. "In the first phase, we have decided to serve warrants on around 100 defaulters. For this purpose, five special teams have been formed. After serving notices, we will give another month to the property owners to pay the tax. Even after that if they fail to respond, we will attach the property and seize movable assets without further notice," the official added. As many defence properties, including those of Indian Air Force, Garrison Engineer (North & South), Defence Research and Development Organisation (DRDO) and Defence Machinery Design Establishments (DMDE) and its offices are located in the Cantonment area, the SCB would collect service charges instead of property tax. "For this, we will take help from Defence Estates Office (DEO), AP Circle, to send demand noticesto pay service charges," the official added. "Except a few function halls whose cases are pending in courts, the others are paying tax," the official replied. Incidentally, those who did not pay for over two decades, are now coming forward to pay up. "We have surpassed last year's revenue of Rs 9.07 crore. We have earned Rs 12 crore so far and by March we are hoping to collect Rs 15 crore," the official said. NO CHANGE IN PROPERTY TAX The general body approved NMMC's proposal of not hiking property tax for The proposal for retaining last year's rates was the sole agenda discussed in the Friday meeting, as the Nerul cylinder blast dominated the discussion. The remaining proposals were set aside for the next time. IPTI Xtracts Page 2

3 Property tax rates have not been hiked since 2006 and the rates for residential propertiwes remain at 32.67% and for commercial and industrial properties, the rate is set at 53.33%. The decision to not revise the property tax was taken so as not to burden citizen reeling under economic slowdown. "The sluggish economy has affected the residents and hiking the property tax would have further burdened them,"this decision will not affect the budgetary allocation for the next year even if property tax is a means to earn revenue," said civic commissioner Abasaheb Jarhad. The no hike of property tax doesn't change NMMC's penalization on illegal constructions. Around 9700 odd property surveyed by the NMMC is said to be illegally constructed and the penalty recovered from them is pegged at approximately 3 crore. "Majority of illegal construction are happening within the rural parts of the city. There has been an amendment in the Mumbai Municipal Corporation Act to collect 2 times the tax from those having illegal construction over and above the actual rate," said NMMC Assessor and Collector, Prakash Kulkarni. Navi Mumbai is informed to be collecting approximately 92 crores from residential property and around 164 crore from MIDC reigon likewise 150 crores from commercial areas CHENNAI CORPORATION LOSES BIG BUCKS: 60% OF BIG PROPERTIES REMAIN UNDERVALUED Corporation of Chennai has been losing crores of rupees due to its failure to revise its property 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 underassessed 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. IPTI Xtracts Page 3

4 The number of taxpayers in Chennai increased from 6.5 lakh to lakh after the city's expansion in 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 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 MANGALORE: BRACE UP FOR PROPERTY TAX HIKE FROM APRIL 1 In all probability, the residents of the city will have to bear an additional property tax of not less than 15 percent per year with effect from April 1 this year. It may be recalled that both the BJP and Congress parties had promised to the voters during the previous election that self assessment property tax scheme would not be implemented in the city. However, the BJP which got elected then, took shelter under the reason that the then administrator of the city corporation, the deputy commissioner of Dakshina Kannada district, had implemented the scheme. In the recent election, Congress had repeatedly assured the people that it would not hike the property tax. However, as per section 109 of Karnataka Municipal Corporations Act 1976, property tax has to be revised by an addition of not less than 15 percent once in three years. This hike can be as high as 30 percent, as per this provision. Although the hike needs to be approved by the city corporation, the local city council is non-functional at present as the election for the post of mayor is still pending. As such, Dakshina Kannada district deputy commissioner, who also happens to be the administrator of the city corporation at present, has the power to bring the hike into effect. If he gives his nod, which is likely, property tax on dwelling units, commercial units, non-agricultural vacant lands etc will go up by not less than 15 percent from April 1 this year. If minimum hike is approved, the city corporation may be able to collect crore in the coming year. District in-charge minister, B Ramanath Rai, has said that it would be in the interest of the people if a decision on the hike is taken at the meeting of the corporators rather than by officials. NAGPUR MUNICIPAL CORPORATION TO BRING ALL PROPERTIES UNDER TAX PURVIEW Nagpur Municipal Corporation (NMC) has started bringing unassessed properties under property tax purview and reevaluate the existing properties that have seen changes in structures. The process is being carried out with the help of GIS mapping system. Work on 15 of total 75 wards is said to be completed and hinted at 40% changes in properties. Top officials and office bearers had talked about large number of properties not under tax purview and also massive changes in existing properties. Tech savvy standing committee chairman Avinash Thakre launched the new system of identifying unassessed properties and revaluation of existing properties. On Thursday, private agency roped in by Thakre gave a powerpoint presentation of the new system. IPTI Xtracts Page 4

5 Thakre said entire system will be established by April and will help increase revenue to a great extent. "NMC was having satellite images of properties taken in Year-wise satellite images upto 2014 have been obtained and being compared with data of New properties will be given a tax demand and revaluation will be done on structures that saw changes. Each property will be given a number. Annual property tax demand and recovery will be linked with that number. The process will be continuous and new properties will be added to the system," he said. Thakre added that the same system could be utilized for other purposes including mapping road network, streetlight system, trees, playgrounds mapping etc. "The first target is property tax department as there is much scope of increase in revenue here. I obtained data of open plots not brought under tax purview and gave it to the department. Tax has been levied on around 30,000 plots till date. These efforts increased the total demand to Rs 417 crore," he said. SELF-ASSESSMENT OF PROPERTY TAX TO GO ONLINE SOON Residents of the Greater Hyderabad Municipal Corporation (GHMC) will shortly have an option for online property tax assessment. The corporation will provide an opportunity to the people for filing self-assessment of property tax online. After the completion of trials in next three to four days, filing self-assessment of property tax would begin in about a week s time, GHMC commissioner Somesh Kumar said. Speaking to newsmen after the Property Tax Parishkaram (PTP) programme on property tax related grievances redressal on Saturday, the commissioner said applicants who want to get their property assessed can do so online by logging on to the GHMC website and by furnishing correct information. The owners can pay the amount as the scheduled rates for areas-wise levying of property tax has already been fixed, he added. Meanwhile, the Property Tax Parishkaram received a good response from the public and it was decided to conduct the programme on March 2 from 10 am-1 pm. BANGALORE: PROPERTY TAX TO DOUBLE IN IT-BT CORRIDOR In an attempt to fill its parlous coffers, the BBMP is contemplating doubling property tax rates in some newly-developed areas in city, including Whitefield, Mahadevapura, Rajarajeshwarinagar and Bommanahalli. These areas, currently in F zone which host IT-BT companies, and the new middle class, may now be classified on par with the A zone that has the highest property tax rates. The cess on properties in A zone is double that of those in F zone. The BBMP collects Rs5 per sqft on rented residential properties, Rs2.50 per sqft for residential properties used for own purpose in A zone, as against Rs2 per sqft for residential properties that are rented and Re1 for residential properties for own use in `F zone. Owners of commercial properties (own use) have to pay Rs10 per sq ft in A zone while it is Rs1.50 in F zone. Commercial properties that are rented out in A zone attract Rs20 per sq ft while it is Rs3 in F zone. IPTI Xtracts Page 5

6 We are expecting to generate around Rs4,000 crore to Rs5,000 crore revenue from the properties in F zone that will be reclassified as properties in A zone, Dr MS Shivaprasad, chairman, standing committee (taxation and finance), BBMP, told mediapersons on Sunday. He said the revenue staff of the BBMP have been advised to focus on the collection of property tax from commercial properties. There is no problem with residential property owners who pay the tax voluntarily. We expect commercial property owners, including IT and BT companies, to pay the property voluntarily, but they are not coming forward to pay the tax. We are constituting a high value cell to focus on the collection of tax from commercial complexes and IT and BT companies, he said. The BBMP has collected property tax of Rs1,368 crore this year and expected to collect Rs200 crore in by the end of March Many property owners pay the tax in March, he said. GHMC TO CRACK DOWN ON PROPERTY TAX DEFAULTERS Municipal authorities will begin a crackdown on the top 200 property tax violators, GHMC Commissioner Somesh Kumar said on Saturday. Officials have been directed to take action, he told reporters. Having set a property tax collection target of Rs.1,250 crore for the year, the GHMC has already collected about Rs.589 crore, a rise of Rs.81 crore over the corresponding period last year. To meet its target, the civic body will train its focus on commercial establishments. Domestic properties outnumber commercial properties, but about 70 per cent revenue comes from the latter, Mr. Kumar said. The GHMC has decided not to issue the list of top defaulters this year, and officials would directly tackle the defaulters. GHMC has tools like issuing Red Alert, a Warning Letter and finally, attachment of the property. All options will be employed to ensure dues are collected, he explained. Settling long-standing court cases was another segment that GHMC would look into to shore up its finances. Some prime properties are locked in legal battles, and we would prefer to settle these in a mutually beneficial manner so that the owners would be willing to pay tax, Mr. Somesh Kumar said. To clear litigations and nagging doubts among property owners, GHMC officials would also clear revision petitions on priority. Each petition will be judged on the parameters of locality, the way property is being used, and the type of the property. GHMC will also unveil a new Self Assessment Scheme on trial basis from next week. It will enable residents to assess their property according to predetermined slabs. A Property Tax Parishkaram programme will be held on March 2. SOON, ALL PROPERTIES TO BE ON GEOGRAPHIC INFORMATION SYSTEM (GIS) MAP TO HELP IN TAX COLLECTION In an attempt to improve its functioning, the Ahmedabad Municipal Corporation (AMC) will soon create an elaborate map of all the properties of the city. Satellite-based technology known as Geographic Information System (GIS) will be used for the mapping. AMC has invited proposals from the interested parties for carrying out a survey in the city as well as creation of the map. IPTI Xtracts Page 6

7 The project will help in creating a digital base-map of the city which will have a record of all properties as well as municipal services like drainage lines, water network, man-holes, streetlights and buildings and other attributes. As part of GIS mapping, each property will be given a unique number for identification in the map. Elaborating on its benefits, manager of AMC s e-governance department, Yatindra Nayak said, The mapping of the properties will help a lot for property tax collection as well as for administrative purpose. With this, we can find out which area has more population density. This information can help in arranging municipal services like hospitals, water network lines, drainage lines, etc. The official further said that there are many properties which figure as residential units in AMC records, but are in fact commercial. Identification of such units can increase the property tax collection significantly. Also, we can come to know of defaulters, added the official. The entire project will be carried out at a cost of Rs8-10 crore, out of which Rs2 crore will be funded by the central government through Jawaharlal Nehru National Urban Renewal Mission (JnNURM). While AMC has just begun with the project and invited proposals for the same, Rajkot Municipal Corporation (RMC) began the work in About the system and its benefits, municipal commissioner of RMC, Ajay Bhadoo said, We finished the mapping of more than 3 lakh properties in 2013 and it has helped immensely in mapping residential and commercial units. A number of properties which were registered as residential in our records have been identified as commercial now, thus increasing the tax collection. Also, new properties coming up in the city have been mapped and the areas which are deprived of basic services have been identified with the help of this system crore is the cost of the entire project, out of which Rs2 crore will be funded by the central government through JnNURM. BAND, BAAJA, TAX: DEFAULTERS FACE MUSIC A week after the Kolhapur Municipal Corporation (KMC) decided to play loud music outside the properties of the defaulters, the move has paid rich dividends and added Rs 4 crore to the civic body coffers. The brass bands accompany officials of the property tax department to the properties and play loud music to shame the owners into clearing their dues. There are four teams of the bands playing the music in front of the properties of the defaulters. Head of the property tax department Dilip Koli said, "We launched the drive a week ago and we have recovered Rs 4 crore from the defaulters. We had sent notices to the defaulters a month ago. However, very few responded and therefore, we started playing the bands. We hope to achieve the target set for the property tax collection in the remaining days of the current fiscal." The KMC has set the target collecting Rs 42 crore through property tax for this fiscal. So far, it has recovered only Rs 26 crore. The civic administration hopes that the music bands will help to achieve the target. IPTI Xtracts Page 7

8 "We are still Rs 16 crore short of the target. However, considering the response to the drive, we hope that we can easily reach the target. We are planning to use the bands to make defaulters of others taxes, including local body tax, license fees and water taxes, pay their dues," added Koli. Property tax is one of the main sources of revenue for the municipal corporation. The property tax department handles the billing and collection of tax on residential, commercial, plots and other types of properties held privately or by the government within the KMC limits. According to the civic officials, there are around 1.25 lakh properties in the city. However, many of the properties are still to be assessed and brought under the tax ambit. "We have started the drive to survey unassessed properties in the city since January this year. After the completion of the survey, we are going to play the bands in front of such properties and will make them register with the department. The initiative will increase the revenue significantly," said Koli. IPTI Xtracts Page 8