IPTI Xtracts
Property Tax and Assessment News From Around the World- For Information Purposes Only
INDIA







● What’s Inside – February 2015
NMC ‘seals’ police station for tax default
Shamed Star Hotels Clear Their Tax Dues
Legit tax on illegit slum?
KMC's spending in areas will now be proportionate to tax collected
Property tax assessments stump residents
City council bans transsexual tax collectors after residents staged angry protests
Seek legal opinion on new formula for property tax collection, BJP tells BMC
NMC ‘SEALS’ POLICE STATION FOR TAX DEFAULT
Nagpur Municipal Corporation (NMC) on Saturday sealed Yashodhara Nagar police station situated in north Nagpur for
default in payment of property tax. Surprisingly, the action has come only on paper and taken for not paying property tax
since 2006.
NMC Ashi Nagar zone assistant commissioner Harish Raut told TOI that the police station was supposed to be actually
sealed, but the action was not literally followed as it is a sensitive issue with criminals having been lodged there. "Property
tax of Rs8.36 lakh is due on the police station which is on a rental basis. Tax was not paid despite several reminders. The
NMC team went to the police station and completed the sealing process on Saturday. A notice stating that the police
station was being sealed was pasted in the front area," Raut said.
Senior PI from Yashodara police station VP Jadhav said the police station was not sealed and was working normally. "I
received notice from NMC and forwarded it to the head office. All administrative works are handled by the head office," he
said.
The police department routinely fails to pay property tax and power bills in time and attracts action from other
government agencies.
The Ashi Nagar zone team also took action against 11 private residential properties on Saturday. The zone issued notices to
12 property taxpayers, giving one week's time to pay the long pending tax or face sealing.
Satranjipura zone sealed three residential properties by locking them for property tax default and attached two other
properties.
Teams from Laxmi Nagar, Dharampeth and Nehru Nagar zone also attached some open plots and issued warrant notices to
residential properties for not paying tax since long. Municipal commissioner Shravan Hardikar and deputy municipal
Page 1
IPTI Xtracts
International Property Tax Institute
www.ipti.org
*The items included in IPTI Xtracts have been extracted from published information; IPTI accepts no responsibility for the accuracy of the
information or any opinions expressed in the articles
IPTI Xtracts
Property Tax and Assessment News From Around the World- For Information Purposes Only
commissioner Sanjay Kakade are holding daily review of the property tax recovery as only two months are left for the
current fiscal to end.
SHAMED STAR HOTELS CLEAR THEIR TAX DUES
CHENNAI:The city Corporation took to beating a drum and shaming star-hotels in the city for not paying property tax.
On Friday, officials from zone 13 targeted five hotels, including Hilton at Guindy, Rohini Hotels at Saidapet and Hotel Leela
at MRC Nagar.
Playing the thappu loud for all passersby to notice and hanging a poster on the gates of the Hilton, which read that the
hotel promoters have evaded paying property taxes, was enough to bring annoyed hotel executives out of their comfy
zones. While the executives tried to pacify, the Corporation officials remained unmoved and threatened to dump a load of
garbage in front if the promoters did not clear the arrears amounting Rs 33.90 lakh pending from October 2014,
immediately.
After a couple of hours of playing the waiting game, the hotel promoters budged and paid up their dues. “The promoters
were giving lame excuses one after another on every occasion. This time, we decided that enough is enough and hence
such a move,” an official said.
At the end of the day, officials hauled in a total of Rs 1.5 crore from each of the targeted hotels. “Section 104 of the Chennai
Municipal Corporation Act 1919 is often misunderstood. It states that the owner must pay property tax dues within 15 days,
after commencement of the half year. But, for lack of understanding, people take it that they have time until the end of half
year to pay their dues,” an official said.
“Representatives of one of the hotels went as much to dare us to come to their doorstep playing the drum. They thought it
would bring them more publicity,” the official added.
No Charges For Online remittance
Chennai: The facility to pay property tax online without incurring service charges for the transaction is ready and is awaiting
inauguration, according to Corporation officials. The measure was announced a few months ago.
______________________________________________________________________________________________________
LEGIT TAX ON ILLEGIT SLUM?
When octroi is discontinued, and LBT is not even considered, property tax on illegal slums is the only way out. But here's
the crucial question; is Mumbai ready for it?
The Municipal Commissioner (MC) of Mumbai presented the budget proposal for 2015-16 for the city. The Standing
Committee of the Corporation will vote on this in the coming weeks. The MC's budget proposal is already up on the
website mcgm.gov.in. Intrepid surfers might be tempted to click on a link called "Budget at a glance for 2015-16", expecting
to get a quick snapshot understanding. You know, fancy pie charts, showing very simply, where the money comes from,
and where it goes? Or a nifty graphic, showing for every hundred rupee collected, how much goes to maintain roads, to
Page 2
IPTI Xtracts
International Property Tax Institute
www.ipti.org
*The items included in IPTI Xtracts have been extracted from published information; IPTI accepts no responsibility for the accuracy of the
information or any opinions expressed in the articles
IPTI Xtracts
Property Tax and Assessment News From Around the World- For Information Purposes Only
water supply, to schools and so on? No such luck. The document supposedly meant to be reader friendly might give you a
headache. It is too dense, and uses code numbers difficult to decipher. If this is the status of budget transparency in India's
preeminent municipal corporation, one can only shudder about other municipalities. Why do city budgets have to be so
inscrutably difficult to understand? Whose responsibility is it to make it accessible to the common man, the voter and
taxpayer? Surely it's the Corporation, and not some NGO's, or newspapers who should be doing this. Of course, we have
come far from the days when it wasn't even put on any website. And thankfully we do have the MC's speech. That is much
easier to understand, and gives a reasonably clear picture of Mumbai's finances.
The total budget for next year is roughly Rs 33,000 crore. Since in the present year, there has been considerable underspending (as compared to the budget presented one year ago), hence the budget size for 2015-16 is 27 per cent higher. The
present year's under-spending is mainly due to capital items, i.e. developmental projects. Mumbai got almost Rs 8,000
crore, or about 41 per cent of its revenue receipt from octroi. This item keeps going up by 10 or 12 per cent every year,
irrespective of the state of the economy. It's a daily cash collection (of about Rs 15 crore), and keeps the Corporation liquid
and solvent. Unfortunately the Centre has tabled a Constitutional amendment in the Lok Sabha, which will abolish octroi.
Without recourse to octroi (or even Local Body Tax (LBT)), Mumbai is left floundering, looking for revenue source, which is
liquid and over which it has complete autonomy. (By the way, LBT is a good idea, if only we can allay the fears of the trading
community, that they won't be harassed by tax inspectors. Refer to earlier Mirror columns for LBT advocacy. But as of now
it seems like a dead idea, especially since the Bharatiya Janata Party (PJP) manifesto pledged to discontinue it pronto.)
So what other options does Mumbai have? The MC's speech has a few suggestions. These include higher charges for water,
fire services, etc. But the most striking one relates to property tax. In an ideal world, the city's finances would largely
depend on property taxes, like all the great cities of the world. But Mumbai does not have the authority to decide on its
property taxes. More importantly, 65 per cent of its population lives in slums, which are mostly not taxed. Many slums are
also illegal. The MC is proposing that we begin taxing slums too. This would mean imposing a legal property tax on an illegal
property. Is this tenable? Is this a way to de facto legalise slums? Mind you, it's not as if slum dwellers don't pay any taxes.
They do pay indirect taxes when they purchase goods and services. They are also subject to huge and stiff "hafta" taxes.
So, very soon, the slum dwellers will have to be issued property registration cards, so that they start paying taxes. Legalise
slums by giving them property rights over the land that they squat on. This is the implication of property taxation of illegal
slums. Ready for it, Mumbai?
_______________________________________________________________________________________________________
KMC'S SPENDING IN AREAS WILL NOW BE PROPORTIONATE TO TAX COLLECTED
The Kolhapur Municipal Corporation (KMC) has decided to cut expenditures over developmental works such as road
construction, storm water drainage, etc., in the areas where its property tax collection is weak.
The decision has been taken since the civic administration is facing dearth of funds for developmental works. Around 50%
of the total revenue of the KMC is generated through property tax and local body tax (LBT). The civic officials have found
that at many places such as slum areas and the outskirts, the citizens are still reluctant to pay the tax.
Diwakar Karande, property tax superintendent in the KMC, said, "We are facing financial crunch due to reluctance of the
citizens living in the suburbs and slum areas. At present, the expenditure in every ward is equal and there is public outcry
over the slow progress of developmental works due to paucity of funds. However, from now on the funds collected from a
particular area will be spent in proportionate amount in a particular area."
Page 3
IPTI Xtracts
International Property Tax Institute
www.ipti.org
*The items included in IPTI Xtracts have been extracted from published information; IPTI accepts no responsibility for the accuracy of the
information or any opinions expressed in the articles
IPTI Xtracts
Property Tax and Assessment News From Around the World- For Information Purposes Only
During the last financial year, the civic administration had collected Rs 36 crore as property tax. For the current fiscal, a
similar target has been set. Earlier, property tax was calculated using the rateable value system. The system calculates
property tax on the maximum amount of rent fetched by a property in a year. The KMC, however, switched to the capital
value-based system since 2011-12, that calculates tax on the present market value of the property.
The proposed tax calculation system is based on the capital value of the property, factoring the ready reckoner value on
the basis of age, price, location and type of property.
"Since 2011, property tax structure has not been changed. The rates will be the same for the next financial year. On the
other hand, the ready reckoner (RR) rates are increasing by 14% every year on an average, on which the capital value of the
property is calculated. Despite increase in RR rates, property tax has not increased proportionately," Karande said.
The KMC will increase property tax from 2016-17, but there will be no changes for the next financial year (2015-16). Property
tax is one of the major sources of revenue for the municipal corporation after LBT and water supply tax. The tax is collected
from all the owners of residential and commercial plots as well as other types of properties held either privately or by the
government (state or central) within the KMC's limits.
During the last financial year, the department could recover just Rs 27 crore as against the target of Rs 42 crore. The target
was lowered to Rs 36 crore owing to poor recovery. For the current fiscal, the department has set a target of Rs 36 crore
and has so far recovered Rs 26 crore as property tax.
"We have issued notices to the tax defaulters and also sealed some of their properties. From next week, we will deploy a
music band to play in front of the houses of the defaulters so that they pay the tax out of embarrassment," Karande added.
* Some of the fringe and slum areas yield lower property tax due to reluctance of the owners
* The KMC is facing difficulties in equally distributing the funds for developmental works
* Henceforth, the funds will be spent proportionate to the property tax being paid by the residents of a particular area
Property tax stats
* Under tax ambit: 1.24 lakh
* Untaxed properties: 6,000 (approx)
Revenue generated (in Rs cr)
Fiscal Target Revenue generated
2011-12 3121
2012-13 36 37
2013-14 36 33.5
* 2014-15 36 26
* Figure till February 7, 2015
Page 4
IPTI Xtracts
International Property Tax Institute
www.ipti.org
*The items included in IPTI Xtracts have been extracted from published information; IPTI accepts no responsibility for the accuracy of the
information or any opinions expressed in the articles
IPTI Xtracts
Property Tax and Assessment News From Around the World- For Information Purposes Only
PROPERTY TAX ASSESSMENTS STUMP RESIDENTS
Many residents of Secunderabad Cantonment, who received their property tax assessments last month, were shocked to
find they owe more than four times the amount they paid last year.
The Secunderabad Cantonment Board (SCB) took up the reassessment of residential properties last year after a gap of 25
years in 2014. Tax evaluators were sent to take building measurements to calculate plinth area and fix Annual Rental Values
(ARV), which have increased since the last assessment was made several years ago.
After the evaluation, the SCB sent out assessment notices to residents stating that the assessment is valid from April 1, 2012
to March 31, 2015. If the property owner is not satisfied with the assessment he can make representations to the Chief
Executive Officer (CEO) within 30 days of receipt of notice.
“My property tax rates have increased four times. I was told a reassessment has been done and thus an increase was to be
expected. But the raise is very high,” complained a resident of West Marredpally.
According to an official in SCB, the board has so far received nearly 500 representations for reassessments. SCB is now in
the process of responding to representations by calling for meetings with the CEO, following which the actual tax will be
fixed.
Besides wanting to know the rationale behind assessment, property owners have also sought to know if the evaluation
applies retrospectively as the notice gives no such hints. The Supreme Court had in the past prevented the SCB from
collecting taxes retrospectively, it is being pointed out.
“The levy of tax is arbitrary. We have demanded that it be on par with surrounding municipal areas after taking into
consideration the facilities being provided. Many colonies do not get regular supply of drinking water and they employ their
own garbage collectors besides maintaining parks at their expense. We have demanded that the increase be
commensurate with the ground realities,” said Venkata Ramanayya, president of Confederation of Cantonment Colonies
Resident Welfare Association (CCRWAS).
When contacted, CEO Sujatha Gupta said that residents with dues in financial years 2012-13, 2013-14 and 2014-15 will have to
pay as per the new rates, and residents who have paid regularly will also have to pay the difference between the new tax
rate and old rate for the last three financial years.
____________________________________________________________________________________
CITY COUNCIL BANS TRANSSEXUAL TAX COLLECTORS AFTER RESIDENTS STAGED ANGRY PROTESTS
Residents claim the council hired transsexuals and eunuchs to "terrorise" people into paying their taxes
Page 5
IPTI Xtracts
International Property Tax Institute
www.ipti.org
*The items included in IPTI Xtracts have been extracted from published information; IPTI accepts no responsibility for the accuracy of the
information or any opinions expressed in the articles
IPTI Xtracts
Property Tax and Assessment News From Around the World- For Information Purposes Only
Bullying: Council bosses using transsexuals and eunuchs have been branded as "bullies" by local residents
A city council has told taxmen enforcing an unpopular property tax to stop using transsexuals and eunuchs to collect
unpaid debts after residents staged a mass protest.
Council officials in India's southern city of Chennai decided to hire the unusual tax collectors believing that it would shame
people into coughing up money they owed.
After expanding the network of eunuch and transsexual tax collectors, the council were predicting a 25 percent increase in
tax income this year.
But the plan was scuppered after local residents started staging angry protests outside council offices.
Local man Raj Muamar, 42, said: "It is outrageous because some people have not paid simply because they have a
legitimate dispute over the amount and using these individuals to terrorise them into paying up is just bullying."
Page 6
IPTI Xtracts
International Property Tax Institute
www.ipti.org
*The items included in IPTI Xtracts have been extracted from published information; IPTI accepts no responsibility for the accuracy of the
information or any opinions expressed in the articles
IPTI Xtracts
Property Tax and Assessment News From Around the World- For Information Purposes Only
Banned: City Council has told taxmen enforcing an unpopular property tax to stop using transsexuals and eunuchs
Now Chennai council leaders have ordered the taxmen to stop demanding the property tax by using transsexuals and
eunuchs. Eunuchs - men who lack external genitalia - are regarded as powerless in India and traditionally make a living on
tips for dancing at weddings or blessing newborns. Transsexuals and eunuchs often receive around four percent of what
they collect from defaulters and are usually hired by private individuals to collect debts. But this was the first time they had
been employed by a civic body. The incident happened after a group of eunuchs gathered outside the Hilton hotel in
Chennai, when it failed to pay property tax. The eunuchs, who were accompanied by musicians, danced outside the front of
the hotel until the owners paid up the tax.
___________________________________________________________________________________
SEEK LEGAL OPINION ON NEW FORMULA FOR PROPERTY TAX COLLECTION, BJP TELLS BMC
BJP Mumbai-unit president Ashish Shelar, along with other corporators from the party, met Municipal Commissioner
Sitaram Kunte on Wednesday demanding that legal opinion be sought prior to the presentation of the new formula for
property tax calculation.
The formula has to be put forth before the standing committee of the BMC for its approval.
Shelar along with group leader Manoj Kotak and senior leaders like Dilip Patel and Amit Satham have requested that the
commissioner seek a review of the formula from an advocate general. “In keeping with the interests of Mumbaikars, we
Page 7
IPTI Xtracts
International Property Tax Institute
www.ipti.org
*The items included in IPTI Xtracts have been extracted from published information; IPTI accepts no responsibility for the accuracy of the
information or any opinions expressed in the articles
IPTI Xtracts
Property Tax and Assessment News From Around the World- For Information Purposes Only
have asked the commissioner to conduct a legal review and seek expert opinions,” Shelar said. He also confirmed that the
commissioner has promised to look into the issue and seek an opinion within a week.
After BMC changed the property tax system from rent value to capital value, the new formula for calculating tax was set as
built-up area (BUA) x Ready Reckoner Rate (RRR) of the property. This formula has been used to collect taxes since 2013
with arrears dating back to 2010.
While BMC claims the new system brought parity in tax payments across Mumbai, property owners complain of glitches
and lack of transparency in calculation and collection. Subsequently, several petitions filed in the Bombay High Court
challenging the new system stated that the civic body was wrongly calculating and collecting property tax on BUA instead
of the carpet area (CA) as was the previous practice as per the provisions of the Mumbai Municipal Corporation Act, 1888.
BMC has now proposed a new formula for calculating tax – “Carpet Area x RRR x 1.2%”
While civic officials have maintained that the move is to maintain revenue neutrality, corporators had slammed BMC for
charging extra and burdening Mumbaikars when the proposal was presented before the committee in June last year. Dilip
Patel, corporator from BJP said, “The BMC is neither a profit making body nor an expert on financial matters to keep
imposing changes.”
Page 8
IPTI Xtracts
International Property Tax Institute
www.ipti.org
*The items included in IPTI Xtracts have been extracted from published information; IPTI accepts no responsibility for the accuracy of the
information or any opinions expressed in the articles