INDIA May AMC's property tax department uncovers undervaluation scam

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1 INDIA May 2016 AMC'S PROPERTY TAX DEPARTMENT UNCOVERS UNDERVALUATION SCAM... 1 JHARKHAND MODEL OF PROPERTY TAX COLLECTION TO BE IMPLEMENTED IN STATE SOON... 1 BBMP TO USE DRONES TO MAP PROPERTY AND TAXES... 2 EAST DELHI MSMES UPSET OVER 10 TIMES HIKE IN PROPERTY TAX; THREATEN TO AGITATE, APPROACH THE COURT... 3 COMMERCIAL PROPERTY OWNERS FACE UP TO 300% HIKE IN TAX... 3 INDORE PROPERTY TAX ONLINE PAYMENT... 4 AMC's property tax department uncovers undervaluation scam Ahmedabad: It took the property tax department a couple of months to wise up to major discrepancies in its assessment process. Tax was being undervalued clandestinely by marking commercial, industrial, or rented properties as self-owned or residential properties. This nearly halved the tax bill for some. The department realized that the open computerized intranet collection system was vulnerable to misuse. An errant official could use the password of a colleague to change the tax formula for a particular property, lowering the tax value. IT agency TCS, which had developed the system for the AMC, was threatened with 'stop payment' for its contract unless proper security measures were put in place. After one-and-half months, TCS included a system in which 'one-time passwords' were sent to the mobile phones of officials logging into the intranet system. The mischief came to light just recently when an independent team of the tax department found that its east zone office had cases in which the status of previously commercial or rented properties had been changed to residential or self-owned properties. This was done for more than 280 properties. An FIR was lodged in the case. "There could be a larger involvement of employees in various zonal offices. But that is a matter of investigation," said a senior AMC official. The tax department also found a similar discrepancy in four zonal offices of the civic body. "It could have blown into a major scam had it not been detected early," the official said. "If property tax is to be changed, a resolution has to be passed by the civic body. In these cases we found that the tax was changed without any mention of such resolutions." Jharkhand model of property tax collection to be implemented in State soon Urban Administration and Development Minister Amar Agrawal stated that very soon the Jharkhand model of property tax collection will be implemented in Chhattisgarh with an objective to raise property tax collections as well as streamlining the property tax payment procedures. Talking to media persons in Raipur on the backdrop of the month-long Lok Suraaj Abhiyaan, which culminated today, Agrawal said the model will be implemented very soon in Chhattisgarh. Implementation of Jharkhand model of tax collection, wherein, the complete collection mechanism is handled by private organizations, is likely to increase the tax volume in all urban bodies, added Agrawal. Alike in municipal corporations in accuracy of the information or anyh opinions expressed in the articles.

2 P a g e 2 Jharkhand, the same will be implemented in all municipal corporations in Chhattisgarh also. Citing example of Ranchi Municipal Corporation, Agrawal said the tax collections in this city has increased manifold. Extending his gratitude to Prime Minister Narendra Modi and Union Urban Administration and Development Minister M Venkaiah Naidu, Agrawal said it is a matter of utmost pleasure that Raipur has been included in the Smart City project. He said in the next phase Naya Raipur and Bilaspur will also be announced as already both these cities are under consideration. While answering the queries on the model on which Raipur will be developed as smart city, Agrawal said since Raipur is an old city there will be not much of demolition works but emphasis will be laid upon improvement of services like e-governance, garbage clearance with effective waste management, traffic flow and effective transport facilities will be enhanced, etc. Agrawal while speaking to media persons said today biggest challenge is disposal of garbage and waste generated daily from various parts of the city. He said the state government is considering 3-4 technologies for effective disposal of garbage which include power generation from garbage, fertilizers, etc. Answering a query regarding ponds where, of the 235 odd ponds, over 130 ponds have been encroached upon, the Minister said effective steps have been taken towards conservation and preservation of water bodies as per Supreme Court directive. When queried that the Chief Minister had raised a question mark on the very process of making Detailed Project Report on beautification of ponds while citing example of a 30 acre pond in village Farhaud under Arang block, where a Sarpanch had beautified the said pond by spending Rs 50 lakh, which he had collected from the fellow villagers. He had stated that the officials should visit the village and learn from the Sarpanch. Minister Agrawal while commenting on the query said he will examine the matter and take necessary steps accordingly. The Urban Administration Minister while talking to the media persons expressed his satisfaction that the Raipur Municipal Corporation has attained its capacity of self-sustenance through effective revenue generation and it is able to meet its expenses through its own resources. However, he added that the state government will continue to provide necessary budget required for the development of capital as it has done earlier. BBMP to use drones to map property and taxes Karnataka government proposes a pilot project to check property tax evasion Plans are afoot to use unmanned aerial systems (UAS), commonly known as drones, to map urban properties and property taxes. This could help the Bengaluru civic corporation improve its poor tax collection. The Urban Development Department and the Karnataka Knowledge Commission (KKC) have mooted the idea, with the latter already exploring the potential of UAS technology in various sectors. "A pilot will be done in one area in the city for which we are scouting for project partners," KKC member secretary Mukund K Rao said. Besides Bengaluru, drone demonstrations will be carried out in Bidadi and Badami towns. "Using drones will definitely help," said Kumar Pushkar, BBMP's special commissioner (finance). "We have done a GIS survey of each property but we don't have details and a verification hasn't been done. Once an aerial survey is done by drones, it can be superimposed on our GIS software. This is time-saving and requires minimal human interference," said Pushkar, who is now on transfer. Property tax is the only major source of revenue for the BBMP. The civic body's record in tax collection, however, has not been up to the mark. In the past fiscal, the tax collection target was Rs 2,456 crore from an estimated 15 lakh properties, against which BBMP could collect only Rs 1,900 crore. For , the property tax potential is pegged at Rs 2,400 crore. Drones have been used locally by government agencies in Bengaluru. Last year, they were used for a mapping study at the Bannerghatta National Park to monitor encroachment, entry of animals into human settlements and inspection of forest boundaries. Similarly, the Bengaluru police used drones for monitoring crowds on the new year eve two years ago. Going forward, drones can be used to check building plan violations in an urban setting like Bengaluru, Rao said. Now, a task group under National Institute of Advanced Studies director Baldev Raj is working to bring out a comprehensive report on UAS technology, its applications and how Karnataka can take the lead on this front.

3 P a g e 3 "The Directorate General of Civil Aviation has come out with a draft policy on the use of drones based on floor-area ratio regulation. Our policy document will be based on this," said task group member Krishna Venkatesh.. East Delhi MSMEs upset over 10 times hike in property tax; threaten to agitate, approach the court The micro, small and medium enterprises (MSMEs) in the national capital are upset over the increase in property tax by almost 10 times at the industrial areas in East Delhi and are ready to move court against the notification issued by the Municipal Corporations in this regard. The notification was issued by the Commissioner of the Municipal Corporation which was earlier recommended by a standing committee and was adopted by the Municipal Legislative Council. Talking to KNN, the President of Patparganj Functional Industrial Estate Entrepreneurs Association, Sanjay Gaur, said that, We will protest against this hike, if the bodies do not listen to us, we will approach the court against the notification. However, he said that the apex bodies have realised that they have taken a wrong decision which needs to be rectified. We requested the EDMC (East Delhi Municipal Corporation) to roll it back, said the President. Further explaining the process, he said that in 2011 a ministerial valuation committee was formed when the MCD was not split in three corporations where they invited the comments from us. They called for comments to evaluate where they could hike the industrial property taxes, he added. Patparganj industrial area does not stand in the line where taxes are needed to be increased, he said adding that they did not take any cognisance of it and applied the recommendations. They have improved our category from G to B without judging, said the entrepreneur. He mentioned that the industrialist in the area contribute to do the civil works in the industrial areas like cleanliness etc. President suggested that the mayors and leaders should meet the LG (Lieutenant Governor) of Delhi to take the decision back. We cannot pay the 10 times the present tax as the margin is very less, he cried. He threatened that if it is not rolled back the decision, then they would sit on Dharna and take protest on the roads of the national capital. He said that the units would also shut their offices to protest. Commercial property owners face up to 300% hike in tax A senior SDMC official said the move is likely to increase the agency s revenue collection by 150 crore during the financial year Owners of commercial properties in south Delhi will shell out more in property taxes as the South Delhi Municipal Corporation (SDMC) is set to give a go-ahead to the recommendations of the Third Municipal Valuation Committee (MVC). The panel has recommended recategorisation of industrial units, hotels (three stars and above), airport and other business establishments. This restructuring will lead to a two- to four-fold increase in property tax. Sources in the SDMC said the MVC report will be presented in next House meeting (May 26 tentatively) for final approval. If the recommendations are implemented, the new tax policy would be applicable retrospectively from April 1. The report also suggests changes in factor (quotient given on type and usage of property). The report has already been approved by the high power property tax committee of SDMC and forwarded to the Standing Committee which deals with financial matters.

4 P a g e 4 A senior SDMC official said the move is likely to increase the agency s revenue collection by 150 crore during the financial year For example, the industrial areas in south Delhi, which presently fall under category G, will be moved to Category B. Similarly, the factor use of the barat ghars and banquet halls will increase from 4 to 6. Property tax is calculated as rates per square meter (sqm) defined for different categories multiplied by factor, said Ram Mohan Singh, SDMC assessor and collector. The MVC report had been pending for approval for over five years. It was submitted to the municipal corporation in 2011 by Municipal Valuation Committee (a five-member committee) constituted by the Delhi government. The report aims to increase revenue through improved property tax coverage and bring left-out properties under the property tax net. The other two corporations, North and East Delhi MCD, have already implemented the MVC report, said Subhash Arya, SDMC leader of house. According to him, the report has already been given anticipatory approval by the former mayor and standing committee chairman. PHYSICAL SURVEY OF PROPERTIES The civic agency collects property tax based on per unit area, which is based on the provisions laid in the first MVC. The second MVC report was rejected by the civic body in the year Besides commercial property taxpayers, SDMC is working to implement methods to bring more residential taxpayers under the ambit of property tax net. This includes conducting door-to-door surveys to identify defaulters, giving unique IDs to taxpayers and preparing a database of property tax payers. Currently, we don t have any record of taxpayers and rely on the data provided by BSES and other utilities. However, many times the data can be misleading, as these are not updated, said Mukesh Yadav, SDMC spokesperson. To rectify information, the department has planned to outsource the task of collecting data of taxpayers to a private company. We will deploy an SDMC inspector and two staff (from the company) to cover each ward. They will tentatively cover 100 houses per day and about 2,500 houses in one month (25 working days). Through this process, we expect to collect data from all 104 wards in four months, said Singh. The SDMC also plans to provide e-passbooks to taxpayers, along with unique identification cards. The e-passbooks will have an online record of all the transactions made by the taxpayers. Indore Property Tax Online Payment

5 P a g e 5 Indore forms the largest city in the state of Madhya Pradesh and is often referred to as the commercial capital of the state. With the abundance of specialized technical colleges it is also considered as the education hub of the state. The city which has been chosen to be developed as one of the 100 smart cities in India and as such it comes as no surprise that the city already has an efficient online portal for the payment of residential and commercial property taxes. The Indore Municipal Corporation or IMC has a dedicated website that allows taxpayers to pay their tax online along with being able to pay other utilities such as water bills. Online Payment of Property Tax: Online payment of property tax in Indore can be made by logging onto the Indore Municipal Corporation website. The option of property tax will be found on the left. Upon hovering over this option with the mouse, the many options of property tax will appear upon which the taxpayer has to click on the online payment option. The page will be redirected to the payment. Here, the taxpayer needs to select property tax under the ledger type. They then need to enter their service number and click on search. The page will then display the payable tax amount against the pin number assigned to the particular property. The taxpayer will then need to select the mode of payment to complete the payment process. Self-Assessment: The portal allows taxpayers to fill out a self-assessment form for their property allowing them to assign a value to their property based on the dimensions of the property, its location, constructed and built-up area and other key details. The portal also allows taxpayers to search for their property tax account, view the defaulter list to see if they have defaulted on any particular payments, acquire a no dues certificate on their property tax and even pay water charges.