AASTHI (GIS BASED PROPERTY TAX SYSTEM) Directorate of Municipal Administration Dept of Urban Development Govt. of Karnataka
Agenda Taxation Systems CVS method of Property Tax in Karnataka Municpal Reforms AASTHI (GIS BASED PROPERTY TAX SYSTEM)
TAXATION SYSTEMS
Why Taxation? The main obligatory functions of the Urban Local Bodies are as follows. Drinking water supply. Street light facilities. Sanitation work. Providing Roads, Drains, Culverts etc
Why Taxation? There must be a source of income to provide the above amenities.. Constitution of India empowered State Government to levy Tax on Land and Building by providing an entry at item No. 49 in list II of seventh schedule there in
Characteristics of Good taxation System Transparent Assessment of Taxes No Discretionary power Low Tax to avoid the incentive to evade Ensure Equity between classes of tax payers High Penalties for tax evaders
Annual Rental Value Annual Rental Value is the rental value which a building is likely to fetch The annual ratable value was calculated on the annual gross rent. The rate of tax for each category of ULBs was as follows. Corporation 20% - 25% CMC 20% TMC/TP 15%
Annual Rental Value Rental Based valuation Plagued by rent control acts There was no formal course of training for these Assessors nor are any specific steps taken to ensure objectivity of the assessment. These Assessors were appointed to the ULBs once in Five years for revision of assessment. Discretionary powers to the Officials
CVS Other taxation Systems Capital Values System (CVS) : Market Value of the Property Unit Area Method (UAM) Basic Tax is based on Plinth/Carpet Area
Main Factors for CVS Location Usage ( Residential/Commercial/Industrial/Public) Occupancy (Self Occupied/ Tenanted) Construction Type ( Based on the type of construction used for the Building) Depreciation Factor (How old is the building)
CVS METHOD OF PROPERTY TAX IN KARNATAKA
Property Tax Reforms Self Assessment based on Capital Value System introduced on 2002-03 with the following Intentions Comply with the Court Directives Increasing Own Tax Revenues Transparency in the Tax Calculation
Property Tax Reforms Property tax is levied on building and vacant land situated within the municipal area. The property tax is based on valuation of the property. There are two methods of valuation of property. For the purpose of purchase or compulsory acquisition of land the valuation is based on the actual market value of the property. For the purpose of taxation the valuation is based on market value guidelines published under section 45B of the Stamp Act. (taxable capital value of property.)
Property Tax on Building The calculation of property tax may be made simple using the following formula: - Building Value = cost of erection of building x Plinth area of the building Depreciation of building = Depreciation quotient based on age of building x Building Value Capital value of land = Market value of land per square feet x Area of the land Taxable capital value of building = Capital value of land + Building Value Depreciation of building Property tax = Rate of property tax x Taxable capital value of building
Rate of tax for Commercial Properties section 101 (2)(a) of Karnataka Municipalities Act 1964 and section 108 (2)(a) of Karnataka Municipal Corporation Act 1976. Population Minimum Rate Maximum Rate < 1 Lakh Population >1 Lakh Population 0.5% 0.9% 0.5% 2%
Rate of tax for Residential Properties Section 101 2(b) of Karnataka Municipalities Act 1964 and section 108(2)(b) of Karnataka Municipal corporation Act 1976 Population Minimum Rate Maximum Rate < 1 Lakh Population >1 Lakh Population 0.3% 0.6% 0.3% 1%
Rate of tax for Vacant Lands Section 101 (2)(A) Exemption from payment of Property Tax for vacant land situated within the Municipal Area having population of less than one lakh. Section 101 (2)(c)(d)(e) of Karnataka Municipalities Act 1964 & section 108 (2)(c) (d)(e) of Karnataka Municipal Corporation Act 1976 Population Minimum Rate Maximum Rate < 10764 sq. Ft 0.1% 0.5% >= 10764 and < 43056 sq. Ft 0.025% 0.1% >= 43056 sq. Ft 0.01% 0.1%
Method of Assessment and property Tax Section 102 of Karnataka Municipalities Act 1964 & section 109 of Karnataka Municipal Corporation Act 1976 The taxable capital value of such land shall be assessed having regard to the Market value guidelines and properties published under section 45B of Karnataka stamp Act 1957 Fifty percent discount is allowed with effect from 1-4- 2005, prior to that, at 100% of the Market value guide lines so fixed by the committee constituted under section 45B of Karnataka stamp Act 1957. This applies to vacant lands also which are liable for payment of tax
Depreciation at the time of assessment Depreciation is allowed to the buildings up to sixty years old, as per standard rate depreciation for buildings as prescribed by the PWD Department Government of Karnataka vide PWD hand book vol 11 pages 55 & 56 of the edition 1958.
Rebate for self occupied building Section 103 of Karnataka Municipalities Act 1964 & section 109A of Karnataka Municipal Corporation Act 1976 50% rebate is allowed for the self occupied building by the kathedras/owner of the respective buildings.
Rebate of 5% on the amount payable Section 105 (1) para (2) of Karnataka Municipalities Act 1964 & section 112A para (2) of Karnataka Municipal Corporation Act 1976. The owner or occupier who is liable to pay Tax, files the respective returns together with the bank challen for having paid the Property Tax within a month from the date of commencement of each financial year (i.e. with is 30th April of each year), shall be allowed a rebate of five percent on the Tax payable by them
ENHANCE THE PROPERTY TAX SECTION 102A of Karnataka Municipalities Act 1964 & section 109A of Karnataka Municipal Corporations Act 1976. The ULBs shall not be assessed each year thereafter but shall stand enhanced by 15% once in every three years commencing from the financial year 2005-06 but the ULBs may enhance property Tax up to 30% once in three years different rates of enhancement may be made to different areas and different class of buildings and lands. Provided further that the non assessment of property Tax under this section during the block period of three years, shall not be applicable to a building in respect of which, there is any addition alteration or variation to it.
Penalty
Penalty Levy of penalty at 2% Vide Section 105 (8) of Karnataka Municipalities Act 1964 & section 112A (5)(a) of Karnataka Municipal Corporation Act 1976: Levy of penalty of Rs 100/- : Section 105 (5) (c) of Karnataka Municipalities Act 1964 & section 112A (5)(c) of Karnataka Municipal Corporation Act 1976. Levy of penalty at two times. Vide section 105(b) of Karnataka Municipalities Act of 1964 & section 112A (5)(b) of Karnataka Municipal Corporation Act 1976
Levy of penalty on unlawful buildings:- Section 107 of Karnataka Municipalities Act 1964 and Rule 22 of the Karnataka Municipalities Taxation Rules 2002 & section 112-C of Karnataka Municipal Corporations Act 1976 and Rule 12 of Karnataka Municipal Corporations Taxation amendment Rules 2002. For any unlawful construction or reconstruction of any building or part a building. Unlawful means. Without obtaining permission under the provisions of KM Act 1964. Layout formed with out approval under the relevant law as prescribed under Town and country planning Act. Land in breach of any provisions of the KM Act 1964 or any rule or bye law made there under or any direction or requisitions lawfully given or made under KM Act 1964 a rule ruler or bye-law.
Levy of penalty on unlawful buildings:- For these types and un law full, the concerned persons shall be liable to pay every year a penalty which shall be equal to twice the property tax levlable on such building, so long as it remains as unlawful constructions without prejudice any proceedings which may be instituted against the concerned in respect of such unlawful constructions, but such levy and collection of penalty shall not be construed as regularization of such unlawful construction or reconstruction.
Challenges in Implementing CVS Completely vacant land s are taxed Appurtenant land is taxed. Determination of capital value based on 45B. Based one time transaction Increases several fold within small span of years Not properly fixed. Tax will become very high 28
Overcoming the challenges Completely vacant land needs to be taxed Tax on appurtenant land abolished Municipal council given powers to vary 45 B values up to certain limit for property taxation from 2005-06 Tax Fixed for three years (an option to increase the tax by 15-30 % every 3 years). For 2002-03 to 2004-05, Property Tax restricted to 2 times of ARV property Tax (Reasonable as most ULBs had not revised property tax for more than 7 years)
MUNICIPAL REFORMS
Urban scenario in Karnataka Categories of Urban Local Bodies in State City Corporations 09 City Municipal Councils (0.5 to 3.0 lakhs population) 42 Total 213 ULBs Town Panchayaths (0.1 to 0.2 lakhs population) 68 Town Municipal Councils (0.20 to 0.50 lakhs population) 94
Good Governance Competent and Qualified Manpower Sound Financial System Efficient planning & Budgeting Assets Management Optimum Resource Mobilization Coordination & Good Team Work Use of IT to improve efficiency / Monitoring of service delivery
Good Governance Contd... Citizens Participation Transparent Citizen Interface Timely redressal of Citizen Grievances Reducing direct Citizen Officer interface Respect for Human Right
Background The Urban Development Department, GoK through the Directorate of Municipal Administration launched Municipal Reforms along with Computerization of all Urban Local Bodies in the year 2004 With Financial assistance from the Asian Development Bank (for NNP) and World Bank (for KMRP) To upgrade all ULBs from the existing manual system to Computer based systems, thus streamlining ULB s Municipal functions through process re-engineering and use of IT tools and Technologies Towards smoother delivery of municipal services to the citizens of Karnataka Municipal Reforms Cell
MUNICIPAL REFORMS CELL Municipal Reforms Cell
Municipal Reforms Cell Exclusive cell under DMA Co-ordination with project partners Rolling out of Application Operations and Maintenance of Centralized Database Managed by Professionals hired from the market directly Hand holding and training of ULBs staff Municipal Reforms Cell
Various Reforms Initiatives (through egovernance tools) HR Reforms Accounting Reforms Reforms in Service Delivery Performance Monitoring Municipal Reforms Cell
Reforms in Service Delivery Phase-I (being implemented) GIS based property tax Public grievances and redressal (PGR) Birth & Death Registration and Certification ULB websites Phase-II (to be taken up) e-procurement Building plan approval Trade license Ward works Water tariff Municipal Reforms Cell
AASTHI (GIS BASED PROPERTY TAX SYSTEM)
Municipal Reforms Cell
Why reforms in property tax.? Issues faced by the department Low rate of filing the property tax returns High accumulation of arrears Negligible penalty for not filing the return. Improper assessment of Property tax by ULB Officials which was causing huge Revenue loss to the ULB Large number of properties were unassesed and not brought under Tax net Delay in preparing the list of defaulters Delay in preparing notices to defaulters Problems in identification of unassessed properties. Poor rate of Tax collection & inaction on mounting arrears No uniform procedure of taxation Lack of procedural compliance to the act, Taxation principles followed by some ULBs were not in accordance with Act Tampering of records Inaccurate and inconsistent details and data provided by ULB Geographically widespread casing problem in monitoring of ULB Tax performance Property records were maintained in manual DCB registers Registers had details of only assessed properties. Out of which, many properties were wrongly assessed
Need for reforms in property tax. Issues from the perspective of citizens/service users Delay in issuing property tax extract to citizens Non service of hand written property tax notices to the Property owners by Bill Collector every year Possibilities of tampering the property details entered manually in paper form Calculation & clerical Errors in Taxation by Bill Collectors & Revenue Officers. Issues faced by the government Discrepancies in reported figures from ULBs Lack of timely information about property details from ULBs Inaccurate projections of Property Tax demand which was one of the main source of revenue of ULBs Monitoring Collection efficiency across 213 ULBs difficult Tampering of Manual records, misplacement of records Manual Data was Inaccurate
Municipal Reforms Cell
Steps involved are. Street Naming Street Numbering Property Numbering Preparation of City Maps Preparation of Area (ward) Maps Identification of each property outlines on property level Area (ward) maps Data entry of Form C - MIS Digitization of Area (ward) maps - GIS Property details linking with digitized map Collection of Data [Form - C] Municipal Reforms Cell
SUPERVISION OF SURVEY WORK SURVEY OF PROPERTIES
SOURCE For Extracting GIS Layers Image From Google or Wikimapia SOI TOPOSHEET 1:50000 scale ULB Base Map
Sample Maps Base Map ULB Base Map Digital ULB Base Map Digitised Base Map Closer Look
Sample Maps Base Map Digitised Base Map Superimposed over Satellite Image
Sample Maps Block Map Over Image
Sample Maps Property Field Survey Map Property Field Survey Map Zoom Digitised Property Blocks
Municipal Reforms Cell
at ULB ULB Base map preparation which includes City Boundary, Ward Boundary, Block Boundary and Street Network Data in Municipal Books/SAS Hiring and Training locally hired Survey Assistants and ULB Engineers on Street naming and Property Numbering Validate and Augment the Data with DCB (CY + last 5 years) Amalgamate Data Capture MIS Attributes Field Survey Create a Unique ID for Each Property Draw Property Polygons with PID on Ward/Block Maps Data Entry by Locally Hired Data Entry Operators Data Validation by Revenue Staff MRC SOI
at SOI Digitization of Maps submitted by ULB Validation of Street naming, Numbering and Property Numbering MRC
at MRC ULB SOI MIS Data GIS Data Integrate GIS and MIS database Verification and Validation of Data Notice to Citizens Verification and Validation of Data Data on Production Continuous Data Updating
After initiative - Present scenario Sound Database of all properties available with the ULB Information about collection of property tax at any point of time Tracking of defaulters Helps in infrastructure planning Quick information about various types of properties in ULB Municipal Reforms Cell
Identified unassessed properties No of ULBs Impact of the Project No of properties as per MAR 19 No of unassessed properties identified % increase in no of properties brought under tax net 213 ULBs 2600863 1207739 31.71% PROPERTY TAX DEMAND PRE & POST Aasthi IMPLEMENTATION ( Amount in lakhs ) Before After Name of the ULB Demand Demand Amount of Increase in demand % Increase Gokak 79.36 107.68 28.32 35.68 Nippani 64.26 79.6 15.34 23.87 Channapattana 55 70 15.00 27.27 Hassan 637.58 909.11 271.53 40.31
Aasthi GIS Based PTIS Application
Processes Simplified (Services Covered) Assessment of property & property record creation Minimizing the chances of property record tampering Property tax payment by Citizen Real time data on collection of property tax by the ULB Easy search & analysis of property & tax related data Tracking of default on property tax payment Over the counter issuing of Khatha Extract Automatic calculation of Property tax demand Online property tax calculator for the citizen Policy/System uniformity across 213 ULBs Cost saving associated with property tax collection
Application access Flow
Administrator Login
Application access Flow
Phase II Features of Aasthi Implemented Computing automatic property tax demand GIS. -Property tax Demand Calculation from 2005-06 -DCB report from the year 2005-06 -DCB Report at Different ULB Boundary levels -Demand Adjustment due to Property Modifications -Demand Adjustments due to any Write offs -Auto Rebate and Cess calculation if any. -Penalties are auto calculated. Automatic generation of demand notices and seizure notices -CAL notices are generated on 1 st July every year for Tax default Properties. -Demand Notice is generated if tax is not paid within 30 days from the time of CAL notice served -Seizure notice is generated if tax is not paid within 30 days from the time of Demand notice served Online Property Tax Calculator -Helps Citizen to calculate their Property Tax -Citizen has to furnish their property Location and Property Details -System will calculate the Property tax and shows the detail Property tax calculation.
ULB Level DCB
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