The Hindu : Tamil Nadu / Chennai News : No consistency in property tax

Online edition of India's National Newspaper
Tuesday, Apr 05, 2005

Tamil Nadu

Tamil Nadu - Chennai

No consistency in property tax

By Karthik Subramanian

CHENNAI, APRIL 4. It is one of Chennai Corporation's best kept secrets: Property tax for buildings that came up after 1998 is levied at a lesser rate than for those before 1998. Despite the recent reforms in the Revenue department, the civic agency has not ventured to set the issue right.

The glitch in the policy is the result of a decision taken in 1998 after the general revision of property tax.

Four slabs

In its revision, the civic agency had increased the tax for existing properties by creating four slabs and increasing the rental values (fixed in 1993) by different percentages: for residential owners by 20-25 per cent; for residential tenants by 30-35 per cent; for commercial owners by 50-90 per cent; and for commercial tenants by 60-100 per cent.

However, for buildings that came up after 1998, the Corporation adopted a different formula: It fixed a flat increase in basic rates for residential and commercial propertyies at the rate of 25 and 50 per cent respectively.

This led to different tax for similar buildings in an area, incongruously the newer buildings attracting lesser tax than the older ones. For example, if we compare two residential buildings of 1,000 sq.ft. area in T. Nagar, then the half-yearly property tax for the old building would be Rs. 1,760 and for the new building it would be Rs.1,631.

Though the councillors and officials are aware of the anomaly and the elected council even passed a resolution in the year 2002 to bring parity to tax structure, the administration seems to have developed cold feet to implement it.

In its 2002 resolution, the elected council had decided to implement the changes of 1998 general revision uniformly. This would mean an increase in tax for all buildings that came after 1998. The uniform tax regime was to come to effect from the second half-year of 2002. The council, however, decided to get the State Government's approval for its decision.

Panel backtracks

Recently, the Government told the Corporation to take its own decision on property tax. When the administration placed a resolution in the Standing Committee (Taxation and Finance) that the revised property tax could be levied for post-1998 buildings with immediate effect, the Standing Committee backtracked.

One of the Finance Committee members, on condition of anonymity, said when the resolution was passed in 2002, most of the ruling party councillors were new and did not comprehend the repercussions of passing the resolution.

"We have promised in our budgets that we are not going to levy any new taxes. No this is not a new tax, we are afraid people will misunderstand it. So we do not want to pass the resolution now."

The Corporation will now have to wait for the next revision of property tax to try and come out with a uniform taxation policy. The quinquinneal revision was due in the second half of 2004-05 but was put off. For the time being at least, owners of property prior to 1998 will continue paying more.

Tomorrow: Over 50,000 entries in the property tax records erroneous.

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