Property taxes in municipal areas are likely to witness a steep increase following the state government’s decision to revise the taxes based on Capital (asset) Value System (CVS) instead of existing Annual Rental Value (ARV) mode.
Although the government directed the municipal bodies to not increase the tax more than 15 per cent from the existing tax, decision to keep revising the taxes in the subsequent years until the gap between the ARV based tax is filled with the new CVS is a matter of concern for building owners.
Interestingly, the government has decided not to reduce tax if the existing tax is more than the proposed CVS system. It further asked to revise the tax upward by a nominal 2 per cent on such structures.
According to sources, the state government is planning to mop up nearly Rs 8,000 crore per year from the existing tax revenue of Rs 2,900 crore from all municipalities. Imposition of heavy penalties on unauthorised and untaxed buildings would also help civic bodies earn huge revenues.
The municipal administration department has readied new software, which will be integrated with the database of the stamps and registrations department, to automatically capture the value revisions.
“The government should immediately withdraw anti-people Ordinance and GOs issued to increase the taxes in urban areas. The revision of taxes is going to make life in cities and towns hell for the commoners as rentals are also likely to go up with the massive burden on the owners,” said CPM state secretary P Madhu.
He criticised the state government for allegedly succumbing to the pressures from the Centre to issue to the Ordinance. He said that Centre and state governments were trying to escape from their responsibility in sparing funds for creation of infrastructure and forcing the people to pay higher taxes.
The property taxes fixed in the present ARV are mostly people-friendly as high taxes are levied only in the commercial areas and prime business zones. Once switched to the new system, the taxes will go up based on the revision of land values by the stamps and registration department which increases the values annually. Changing to the sq.ft mode from the existing sq.yards measurement is also going to levy burden on the building owners.