The Hindu : Karnataka News : SAS may cause slump in revenue for municipalities

Online edition of India's National Newspaper
Friday, Feb 11, 2005

Karnataka

Karnataka

SAS may cause slump in revenue for municipalities

By Our Special Correspondent

BANGALORE, FEB. 10. The Department of Municipal Administration has been badly hit following an amendment to the Municipalities Act in the recent session of the legislature. The last date for payment of property taxes has been extended to March 31.

S.R. Morey, Minister for Municipal Administration, told presspersons here on Wednesday that there will be a slump in the revenue from property taxes and, as per an estimate, it will fall by about Rs. 150 crores compared to an estimated revenue of Rs. 500 crores. Bangalore city will be the worst hit with a fall in revenue of Rs. 100 crores.

As per the recent amendment, the property tax collection under the Self-Assessment Scheme (SAS) will be at 50 per cent of the guidance value. The Government earlier planned to fix SAS at more than 50 per cent in important cities and towns and at less than 50 per cent in other places.

The Opposition had demanded that it should be fixed at 50 per cent, which has resulted in the steep fall in revenue.

He said the department is working on the ways and means to fill the gap and one of the important ways is to check evasion. While only around 40 per cent of property owners pay taxes, the Government has issued instructions to the municipal commissioners to ensure that at least 60 per cent of the owners pay taxes.

Mr. Morey said because of the amendment pertaining to the rate at which the property tax should be collected, the Government will be hit in repaying loans obtained from the Asian Development Bank.

The confusion over SAS has resulted in a large number of property owners not paying taxes for three years. The Government has now extended the last date for payment of taxes to March 31. Payment after the last date will attract a hefty penalty and also attachment of bank accounts of the defaulters.

Asked how the authorities can attach bank accounts, Mr. Morey said a large section of defaulters are well-to-do people while the poor and the middle classes paid property taxes in time. The Government will invoke the necessary provisions of law to attach the bank accounts of defaulters, he added.

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