In a bid to raise its revenue, Pune Municipal Corporation (PMC) has decided to do away with a property tax discount it offered to buildings that came up before 2018, which it defined as “old properties”, if they’ve been rented out. Interestingly, many property owners were unaware of such a discount.
While others said they will have to brace against this escalation in the incidence of tax by hiking rents. Realty observers also fear this will impact resale of properties and many may remain vacant as property owners will try to avoid higher tax payouts.
Desperate to improve the civic body’s income its standing committee’s chairman, Hemant Rasane, had formed a special panel to find ways to ramp up revenue by Rs 1,000 crore. The decision to withdraw the property tax discount of 40 per cent offered to older properties that have been rented out, was taken at the first meeting of this committee. “Having cracked this avenue of improving our revenue, we’ve sought the data on rented properties from the cops (with whom tenant verifications are done). Once we access the data we will implement the new tax regime,” informed Vilas Kanade, who helms the taxation and tax collection department of PMC.
Caught completely off-guard several owners pointed out they were not even privy to being beneficiaries of such a tax rebate. But they warned that if they are now forced to cough up more tax, they will have to raise the rent. “PMC must have done this to increase its revenue, but the impact of this move will be felt by our tenants as we will be forced to push up the rent,” warned Smita Ingale, who has rented out a flat in the city.
Seconding her, another property owner, Kiran Abhiyankar echoed, “Hike in rent is inevitable if property owners find themselves paying additional tax and the rent escalation will not necessarily be proportionate to the higher levy by PMC.”
“There is no mention of any tax waiver/discount on the tax bills. PMC needs to furnish data on the waiver they are giving before charging the additional amount,” contested Shashank Kulkarni, yet another flat owner.
Tax professionals and realty observers fear more dire consequences to this decision. “This is bound to impact resale of properties. A prime attraction for old properties being purchased or even rented is the lower incidence of property tax. There is a huge gap between the property tax on new buildings and the older ones in the same area. This has propelled property resale and renting, even in accommodations lacking certain amenities. Once the tax discount is withdrawn, these properties will lose their lure. Soon many of these properties will fall vacant, in the absence of takers. Similarly rents will go up as owners will not be willing to take the brunt of higher tax,” pointed out Pavan Kasat, a chartered accountant.
