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- Workshop on
- Reforms in Property Tax Assessment and Collection System with Special
Reference to Area Linked System/Unit Area Method
- Organised by
- Mega Cities Association, Kolkata
- 4th April 2008
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- Most ULB’s in India are under financial strain due to lack of buoyant
own revenue sources.
- Octroi and Property Tax being only two major own revenue source, the
former has been abolished in most states.
- The growth in revenue from property taxes has remained sluggish and does
not always reflect the corresponding healthy growth rates witnessed in
property markets.
- In absolute sense, property tax continues to be a marginal contributor
to municipal revenues.
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- Decentralisation initiative through 74th CAA required to strengthen ULBs
financially due to their increased responsibilities and role in
governing cities.
- PT reform is one of the mandatory conditions under JNNURM.
- Establishing a simple, transparent, non-discretionary and equitable
property tax regime that encourages Voluntary Compliance.
- The most common methodology for computation of property earlier was
based on Annual Rental Value(ARV) of properties.
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- Each of the three methods of tax assessment come with their own problems
and cannot be made universally applicable.
- For ARV where tax base is the annual rent that can be derived from the
property, main problem lies in the definition of the rental value
itself.
- Capital value where the tax base is the cost of land plus cost of
construction, where limited availability of sales data and under
reporting of transaction prices gives scope for corruption.
- Area based where problem is of grouping properties and of finding a
rationale for fixing the base rates for different groups.
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- On this background , and in lieu of the mandate of JNNURM, the MoUD’s
concern was to examine the problems associated with the present system
of property tax assessment and develop a framework for state level
policy on the PT reforms.
- On spelling out obstacles being faced by the ULBs in reforming this
important source of revenue, the framework should be more of a practical
suggestion (prescription) to help states and ULBs to improve their
system.
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- To examine the problems associated with the present system of PT
assessment.
- To analyse the process through which innovations were adopted and the
impact of the reform measures already put in place.
- To develop a framework or guidelines for state level policy on PT
reforms as guidance to formulate their own PT policy.
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- Study will be based on both primary and secondary data.
- Stage/Task I:Collection of information pertaining to overall financial
condition of the municipal corporation and efficiency in collection of
tax. Interviews with officials including Dy. Commissioner-Finance, Chief
Assessor, Tax Inspector etc.
- Stage/Task II:Analysis of information collected as per task I to
highlight and compare the advantages and disadvantages in pre and post
reform phases. These take into consideration issues related to
assessment mechanism, statutory provisions, collection mechanism,
financial situation and possible recourses.
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- Stage/Task III: Based on assessment and analysis of Stage I and II,
guidelines for a framework will be given which will help States to
formulate their own policy.The emphasis will be on highlighting the
benefits of the transition capturing how the change happened and why the
change was successful.
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- Data collection is in process: Desk research completed.
- Information on format sent to cities to be filled.
- This will be followed by visit to cities for detailed discussions and
filling up data gaps.
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Notes
