Saturday, October 23, 2021

Percentages in Property tax hike are meaningless

  • M. Virupakshi Reddy, President, Residential Welfare Association, Dr. M.Suresh Babu, Vice President, FRWA & V. Sreenath, General Secretary demand withdrawal of property tax GO by AP government.

Hyderabad : Federation of Residential Welfare Association (FRWA)  demanded government of AP to withdraw orders increasing property and water tax. The new system of taxation would increase the burden on property owners as well as tenants. Under the new system the property tax, the water tax and the drainage charges would increase manifold.  The government has issued the orders as per the Fiscal Responsibility and Budget Management Act. It is not correct to impose additional burden on common man. The FRWA demanded immediate withdrawal of GOs 196, 197 and 198 issued recently.

The municipal administration and urban development department issued a GO No 198 bringing property tax reforms across the urban local bodies in the state.

Order amended five Acts

The order was issued amending five Acts relating to the municipal department to change the system of levying of property tax from annual rental value basis (ARV System) to capital value (CV) system. The property tax will be fixed based on the market value of the asset fixed by the stamps and registration department in a particular area.  The tax shall be levied at such percentages of the capital value of lands or buildings or both not be less than 0.10% and not more than 0.50% of the capital value (CV) in the case of residential buildings and shall not be less than 0.20% and not more than 2.00% of the capital value (CV) in the case of non-residential buildings, which shall be effected from the financial year 2021-2022. 

Guideline value

As per the GO, the capital value of lands and buildings fixed by the Stamps and Registration Department for the purpose of Registration will be deemed to be the guideline value for fixation of property tax for which, zones and localities together with their boundaries; classification of the building; usage of the building; age of the building; plinth area; and door number (or) digital door number (or) unique Property Identification Number (PTIN) will be taken into consideration in determining the capital value. The PT will be fixed at such percentages of the capital value of lands or buildings or both as may be fixed by the municipal council/ corporation as the case may be.

On residential buildings

“The percentage of the property tax so fixed, shall not be less than 0.10% and not more than 0.50% of the capital value (CV) in the case of residential buildings and shall not be less than 0.20% and not more than 2% of the capital value (CV) in the case of non-residential buildings, which shall be effected from the Financial Year 2021-2022,” the GO said. The Vacant Land Tax shall be levied at 0.20% of the estimated guideline value of the land in case of municipalities and 0.50 % in case of municipal corporations. In the case the vacant lands where garbage is being dumped and unhygienic conditions are prevailing a penalty of 0.10% of the guideline value in case of municipalities and 0.25% in case of municipal corporations will be levied till the garbage is lifted and unhygienic conditions eases.

Depreciation not mentioned in GO

Capital value for Land increases, where as house / building / shop value deprecation is not mentioned in the GO. There is no rationale in adding Library cess  for vacant lands.

Ex : Land and building value in Anantapur town will be more than one crore. 0.1 percent for one crore is ten thousand for six months. Now the tax for one crore building is less than 2500 for six months. As per the new GO Property tax will be 4 to 6 times more.

The author is State president, Praja Science Vedika, Hyderabad

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