Property Tax and Assessment News From Around the World- For Information Purposes Only. INDIA What s Inside July 2015

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1 INDIA What s Inside July 2015 NMMC tightens property tax noose, coffers keep ringing Government is the biggest property tax defaulter in Delhi Property tax concessions mooted for green buildings Maharashtra freezes property tax for next five years in Mumbai Tax to be levied on properties above 500 sq ft in Chandigarh South Delhi Corpn to bring more properties under tax net NMMC TIGHTENS PROPERTY TAX NOOSE, COFFERS KEEP RINGING The property tax department of Navi Mumbai Municipal Corporation (NMMC) issued record attachment notices for the first time, which has yielded positive results with an increase of 41% in collections in the first three months of the current fiscal year compared to the same period last financial year. Property tax is the second most important source of revenue after local body tax (LBT), which fills up civic coffers. With the State government deciding to abolish LBT most likely from August, the civic body has zeroed on property tax to fill its coffers. The NMMC property tax department issued 9,722 attachment notices to mop up tax revenues for the current fiscal, which includes the tax demand for the year as also outstanding dues. Civic commissioner D T Waghmare took stock of the financial situation and decided to take necessary steps to plug loopholes and mop up revenue. The department said that notices have mostly been served to commercial establishments and unauthorized structures besides a few industrial units in MIDC area. The civic body also set up a recovery cell in the property tax department for issuing the notices. Sources said that more notices could be issued in the months ahead, if required. Prakash Kulkarni, DMC, (property tax), said, "The defaulters are across all categories, but more in the case of commercial establishments. We will be unsparing to recover the dues. We are sure people will comply as everybody likes their property." Notices were issued under section 264 of Mumbai Municipality Act and penalty imposed has been twice the original amount. This means the tax that has to be paid now will be equivalent to thrice the original amount. However, at the same time, LBT collection is trailing. In the first two months of the present fiscal (April and May), collections dipped compared to the same period in the last financial year.. This year's June collection is yet to be registered, as there are 17 banks where the tax is deposited and they are yet to furnish the details. IPTI Xtracts Page 1

2 Sources said the State government has waived off the interest and penalty dues on LBT and so it is quite likely that the industries (a major contributor of total collections at 55-60%) were going slow on tax payment. In a bid to bring in maximum properties under tax net, the South Delhi Municipal Corporation on Tuesday launched a massive exercise to mop-up property tax collection. For this, door-to-door survey was conducted in all the zones with primary focus on commercial establishments in first phase. South Zone conducted the survey in Green Park Market on Thursday and Satya Niketan on Friday. West Zone conducted extensive survey in Mayapuri Industrial Area and District Centre, Janakpuri and Janakpuri Institutional Area, on Friday. In Najafgarh Zone,survey of hotels and commercial establishments in Mahipalpur was conducted. In Central Zone, the survey was conducted in East of Kailash Market as well as in residential areas. The Assessment and Collection Department, based on data collected from the satellite images and other sources, has identified the properties which are either not paying the property tax or the property tax is under-paid. Based on this information, during the survey, the defaulter properties are being issued notices. Measurement of the properties is also being done during the survey. Notices to many defaulters have already been issued. A member of the survey team stated that the results of the survey are very encouraging and lot of people came forward to pay their taxes during the survey itself. Commissioner Puneet Kumar Goel said that such exercise will be conducted throughout the year and efforts will be made to determine and collect the correct amount of property tax from all the defaulting properties. Ram Mohan Singh, Assessor & Collector said, During the last month, we had issued advisories to more than 2 lakhs defaulters.many people came forward and paid taxes, but still substantial number is not in the tax-net. After introduction of the Unit Area Method, the tax rates have considerably come down and payment of tax and filing of returns is very easy. There is no reason for non-payment of property tax. The defaulting properties identified during the surveys will also be levied penalties and prosecution will be initiated in appropriate cases, under the relevant Sections of the DMC Act. SDMC has also initiated various steps for recovery of its outstanding dues. In many cases, the bank accounts of the defaulters have been attached. In cases where recovery is not forthcoming by attaching movable properties, we are also attaching immovable properties of the defaulters, said a senior SDMC officer. IPTI Xtracts Page 2

3 In a comprehensive survey of 10 lakhs property within the jurisdiction of South Delhi, the civic body has spotted 24 susceptible buildings in their structural safety aspect. On Tuesday, South Delhi Mayor, Subhash Arya, held a meeting with the concerned officials and senior officers of the Engineering Department regarding the review of comprehensive survey of all buildings to ascertain structural safety of buildings and preventive measures on building found to be structurally unsafe or dangerous. The Mayor said that during the survey, as many as 10 lakhs properties were inspected, out of which 24 properties have been found to be susceptible in their structural safety aspect. These are 11 each in South and West Zone and 1 each in Central and Najafgarh Zone. "Accordingly, with a view to precluding any mishap, Section 348 of the DMC Act-1957 has been invoked in respect of these buildings, and Vacation Notices under Section 349 of the DMC Act have been issued to the owners/occupiers of such dangerous buildings," claimed the Mayor. SDMC Commissioner, Puneet Kumar Goel, said, "directions were issued in respect of Government buildings, on structural safety point of view. Conducting such surveys will be a regular feature in the ensuing days." He said to ensure safety of the buildings situated in different areas of the Capital the Corporation has empanelled additional 75 Structural Engineers for assessing the structural safety of buildings. There are other licensed Structural Engineers or such Institutions rendering such services in the Capital. Goel said the public is advised in their own interest to avail the services of such professionals and for taking necessary preventive/corrective measures as and when warranted to safeguard their buildings. GOVERNMENT IS THE BIGGEST PROPERTY TAX DEFAULTER IN DELHI Government departments in the national Capital are the biggest property tax defaulters. Even as Municipal corporations in Delhi battle a financial crunch, governmental and public utility departments owe the three civic agencies more than Rs2,000 crore in property taxes. Senior officials, however, said that the while some of the property tax cases were pending in the high court, attempts were being made for an out of court settlement. According to the data available with the corporations, departments that have defaulted include the likes of BSES Rajdhani and BSES Yamuna, NDPL, Delhi Police, Delhi Zoo, Sports Authority of India, Airport Authority and Housing & Urban Development Corporation Limited (HUDCO), Delhi Development Authority, Delhi Milk Scheme, Transport Authority (Sant Nagar) and IARC Pusa. Various departments owe three municipal corporations a little over Rs 2085 crore as property tax, which according to senior officials could end their acute financial crunch. The defaulters owe the east, north and south corporations Rs 466 IPTI Xtracts Page 3

4 crore, Rs 743 crore and Rs 876 crore, respectively. Senior officials said while the amount has been collected over the years, cases in court have also resulted in loss to the corporation. Senior officials in the corporation are in talks with the various defaulting agencies for an out-of-court settlement, senior officials said. We have already initiated talks with various agencies to settle the matter out of court. While most of them are government agencies, a court case will cost time and money, said a senior official. The municipal corporations are currently under the debt of Rs 1,200 crore, and the condition could change if the various department pay their outstanding property taxes. The three corporations need a little over Rs 1,200 crore to function properly and carry out the various development projects in their area. If these departments pay their due amounts, the civic agencies would not require any additional aides-in funds from the Delhi government, said a senior official. PROPERTY TAX CONCESSIONS MOOTED FOR GREEN BUILDINGS Green buildings should be promoted throughout the country and for that property tax concession of 5% can be given to projects certified as green buildings by Indian Green Building Council (IGBC), MP K Hari Babu said, adding that every individual house should have at least 1KV solar panel to generate at least five units to cater the electricity needs of the house. The MP was speaking at the launch of Confederation of Indian Industries (CII)-IGBC's Vizag Chapter on Saturday. District collector N Yuvaraj said that following the city planning committee's revision of building policies in 2006, approved projects will now need to have more green building features. He also emphasised the need and importance of converting existing buildings into green buildings. IGBC chairman Prem C Jain said that the Union ministry of urban housing and poverty alleviation has agreed to adopt IGBC norms as basic guidelines for affordable housing in the country. He also said that the commissioners of Kendriya Vidyalaya and Jawahar Navodaya Vidyalaya have agreed to convert all their schools into green schools. Jain also said that with over 3 billion sft of green construction, India is the second country in the world with the largest green building footprint. This growth has been made possible with the support of all the stakeholders. IGBC aspires to facilitate 10 billion sft by G S Shiv Kumar, vice chairman, CII Andhra Pradesh, said that IGBC Vizag chapter will go a long way in re-defining the way buildings are constructed and facilitate in exploring new growth opportunities while S Vijaya Kumar, chairman, IGBC Vizag chapter, said that the newly-launched chapter will work closely with all the stakeholders to popularise the green building concept at the state and regional levels. He also shared the work plan of CII-IGBC Vizag chapter. Shekar Reddy, chairman, IGBC Hyderabad chapter, said the government should consider introducing online permissions for building plans and approvals. Mr S Raghupathy, executive director, CII-Godrej GBC, said that today green buildings make good business sense too. "Though the incremental cost of a commercial green building will be 3-5%, the additional costs get paid back within three to four years, with a substantial reduction in operational costs," he said. Over 150 stakeholders attended the programme. MAHARASHTRA FREEZES PROPERTY TAX FOR NEXT FIVE YEARS IN MUMBAI Property tax will be a fixed amount you paid last (till March 31, 2015) till 2020, for Mumbai's 17 lakh middle class families. Occupants and owners of residential flats (carpet area of 500 sq ft and below) will hopefully not face any increase in IPTI Xtracts Page 4

5 property tax for five years. A bill was tabled in the legislative assembly by the state government on Thursday, and was termed as an agenda for the civic elections ahead. "After revision of the property tax on the basis of capital value, with effect from April 1, 2015, it was likely to be increased by 40%, which would have badly affected small flat occupants in the city. Hence the decision," a state official told TOI. The new tax system, introduced a year ago, is based on the type of construction of the property, its location, age of construction, and carpet area. The Brihanmumbai Municipal Corporation (BMC) gets around Rs 3,000 crore as revenue through property tax. "For five years, commencing April 1, 2015, the amount of property tax 'leviable' on residential tenements having a carpet area of sq metres (500 sq ft) or less shall not exceed the amount of property tax being levied and payable in respect of such residential building/tenements as on March 31, 2015," the bill, tabled in the assembly, and which is likely to be passed soon, stated. "Once passed by both Houses the bill will offer major relief to nearly 2 crore Mumbaikars. The state has found it necessary given the circumstances to amend the Mumbai Municipal Corporation Act. The state cabinet had approved the decision a month ago but the Shiv Sena had demanded permanent exemption. The civic house had also approved the demand and forwarded a proposal to the state. Most of these 17 lakh residents stay in older buildings and chawls in the island city. TAX TO BE LEVIED ON PROPERTIES ABOVE 500 SQ FT IN CHANDIGARH An official release said that no tax will be imposed on any residential house or flat having area less than 500 sq ft. The UT Chandigarh Administration on Monday said property tax would be imposed on residential buildings and land having area of 500 sq ft and above in the city from However, no tax will be imposed on any residential house or flat having area less than 500 sq ft, said an official release here. Tax will be charged at a rate of Rs 2 per square yard on entire plot area and Re 1 per square feet per annum on total covered area in sectors including 1 to 19, 26, 27 and 28 which are described as Zone I, it said. For houses located in sectors 20 to 25, 29 to 38 (west), the tax will be 80 per cent of the rates of Zone I. For rest of sectors and areas, the tax will be 60 per cent of rate prevailing in zone I, it said. For CHB Flats, Cooperative House Building Societies & other residential flats (excluding SCFs) having total covered area of 500 sq. ft. and above falling within MC limits (irrespective of zones), the tax rate will be charged at a rate of 0.75 paise per square feet per annum, it said. IPTI Xtracts Page 5

6 The Chandigarh Administration said it was necessary for the Municipal Corporation to raise its own resources for the development of the city and provision of quality services to its citizens by imposing the property tax on all lands and buildings in the jurisdiction of the Municipal Corporation, including Residential Lands and Buildings. "No tax of such nature is being imposed in the city of Chandigarh in respect of the said land/buildings and so the provision of Section 90(4) of Municipal Corporation Act," it said. The Municipal Corporation has not been able to comply with the directions and also not been able to impose the property tax in term of Section 90(1) of the Municipal Corporation Act of 1976 as extended to U.T. Chandigarh, so it has become necessary to invoke the provision of Section 90(5) of the said Act by issuing the present order, it said. SOUTH DELHI CORPN TO BRING MORE PROPERTIES UNDER TAX NET In a bid to bring in maximum properties under tax net, the South Delhi Municipal Corporation on Tuesday launched a massive exercise to mop-up property tax collection. For this, door-to-door survey was conducted in all the zones with primary focus on commercial establishments in first phase. South Zone conducted the survey in Green Park Market on Thursday and Satya Niketan on Friday. West Zone conducted extensive survey in Mayapuri Industrial Area and District Centre, Janakpuri and Janakpuri Institutional Area, on Friday. In Najafgarh Zone,survey of hotels and commercial establishments in Mahipalpur was conducted. In Central Zone, the survey was conducted in East of Kailash Market as well as in residential areas. The Assessment and Collection Department, based on data collected from the satellite images and other sources, has identified the properties which are either not paying the property tax or the property tax is under-paid. Based on this information, during the survey, the defaulter properties are being issued notices. Measurement of the properties is also being done during the survey. Notices to many defaulters have already been issued. A member of the survey team stated that the results of the survey are very encouraging and lot of people came forward to pay their taxes during the survey itself. Commissioner Puneet Kumar Goel said that such exercise will be conducted throughout the year and efforts will be made to determine and collect the correct amount of property tax from all the defaulting properties. Ram Mohan Singh, Assessor & Collector said, During the last month, we had issued advisories to more than 2 lakhs defaulters.many people came forward and paid taxes, but still substantial number is not in the tax-net. After introduction of the Unit Area Method, the tax rates have considerably come down and payment of tax and filing of returns is very easy. There is no reason for non-payment of property tax. The defaulting properties identified during the surveys will also be levied penalties and prosecution will be initiated in appropriate cases, under the relevant Sections of the DMC Act. SDMC has also initiated various steps for recovery of its outstanding dues. In many cases, the bank accounts of the defaulters have been attached. In cases where recovery is not forthcoming by attaching movable properties, we are also attaching immovable properties of the defaulters, said a senior SDMC officer. In a comprehensive survey of 10 lakhs property within the jurisdiction of South Delhi, the civic body has spotted 24 susceptible buildings in their structural safety aspect. IPTI Xtracts Page 6

7 On Tuesday, South Delhi Mayor, Subhash Arya, held a meeting with the concerned officials and senior officers of the Engineering Department regarding the review of comprehensive survey of all buildings to ascertain structural safety of buildings and preventive measures on building found to be structurally unsafe or dangerous. The Mayor said that during the survey, as many as 10 lakhs properties were inspected, out of which 24 properties have been found to be susceptible in their structural safety aspect. These are 11 each in South and West Zone and 1 each in Central and Najafgarh Zone. "Accordingly, with a view to precluding any mishap, Section 348 of the DMC Act-1957 has been invoked in respect of these buildings, and Vacation Notices under Section 349 of the DMC Act have been issued to the owners/occupiers of such dangerous buildings," claimed the Mayor. SDMC Commissioner, Puneet Kumar Goel, said, "directions were issued in respect of Government buildings, on structural safety point of view. Conducting such surveys will be a regular feature in the ensuing days." He said to ensure safety of the buildings situated in different areas of the Capital the Corporation has empanelled additional 75 Structural Engineers for assessing the structural safety of buildings. There are other licensed Structural Engineers or such Institutions rendering such services in the Capital. Goel said the public is advised in their own interest to avail the services of such professionals and for taking necessary preventive/corrective measures as and when warranted to safeguard their buildings. IPTI Xtracts Page 7