Paying up for luxuries and added facilities
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A Government Order on property tax is all set to standardise and bring in more clarity on taxation of all buildings. Shyama Rajagopal analyses the new assessment system and the way it will work out for taxpayers in Thripunithura.
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– Photo: H. Vibhu
New rates: Thripunithura will soon have a new property tax system.
There is going to be a sea change in the manner in which one gives tax for the building one owns. A new Government Order has now asked all local self-governing bodies to decide the tax rate for the buildings in their area in a given range.
The Government has decided that in municipal Corporation area the tax of a house will range from Rs.8 to Rs.15 for a square metre; in a municipal council area it will range from Rs.6 to Rs.15 per sq.m. and in grama panchayats it will range from Rs.3 to Rs.8 per sq.m.
Likewise, a taxation range has been fixed for buildings used for industrial and commercial purposes too. Industries would attract property tax from Rs.16 to Rs.40 for a sq.m. in the municipal Corporation area, in the municipal council area it will be Rs.12 to Rs.30 per sq. m. and in villages it will be Rs.6 to Rs.16 for a sq.m. area.
Commercial space will attract the highest tax with Rs.32 to Rs.160 a sq. m. in the municipal Corporation area; Rs.24 to Rs.120 for a sq.m. in the municipal council area and Rs.12 to Rs.64 a sq.m. in panchayats.
Unambiguous
This new method of tax assessment is aimed to be more standardised and unambiguous unlike the earlier method of calculating tax on the basis of the rental value of the property. The new method is also dependent on a number of parameters apart from the plinth area of the property, like the kind of road that runs near your property, location, quality of construction, the usage and the age of the building. The Government has also decided that for residences the basic tax rate for the first year should not exceed the range between Rs.3 to Rs.5 in panchayats, Rs.6 to Rs.8 in municipal and Rs.8 and Rs.12 in Corporation areas.
The calculations may sound confusing at first. But these have been decided to provide an impetus to developmental activities in less developed areas.
Accordingly, Thripunithura and Kalamasssery municipal councils have drawn up a draft rate of taxation for the buildings, which will be put before grama sabha meetings after seeking objections to it and then adopted by the respective municipalities.
The Thripunithura municipal council has prepared a draft which has decided to calculate the basic rate as Rs.7 per sq.m. for residences, Rs.24 a sq.m. for industries and Rs.100 a sq.m. for commercial purposes.
Concession rate
The new method is expected to be more beneficial to people living in rural areas, away from the primary roads of a town, as it will invite a concession on the basic rate. Also there will be no tax for residential property which is less than 30 sq.m in area.
For buildings that are below 75 sq.m. area there will be a concession of 25 per cent on the basic rate decided by the municipality depending on the location. For buildings that have an area ranging from 75 sq.m. to 125 sq.m., there will be a concession of 10 per cent.
While there will be no concession for buildings which are above 125 sq. m up to 200 sq. m., any property with an area over 200 sq. m and up to 300 sq. m will invite a higher tax on the basic rate by 10 per cent. Any building over 300 sq.m. will have a 20 per cent increase on the basic rate.
Taxation zones
The local body has to identify the three zones of taxation under its jurisdiction - primary, secondary and tertiary. If the taxable property is located in the primary zone, which is identified as the major activity place of a town with Government and quasi-Government offices, schools, railway station and bus stands, there is no concession on the basic rate. However, if the location of the property is in the secondary zone, which is identified as adjacent or surrounding the main centre, there will be a concession of 10 per cent. If the property is in tertiary zone, which is comparatively less developed, there will be a 20 per cent concession on the basic rate.
Next come the roads that will witness an increase or decrease the tax. For example, Thripunithura municipality has identified Town Circle Road, Kochi Refinery Road, Vaikom Road, Eroor Road and a couple of other roads as the first class roads of the town.
Since these roads are considered equal or similar to the advantage provided by the National Highway or the State Highway, a property with such a road frontage will invite a higher tax on the basic rate by 30 per cent.
Properties located on district roads or second class roads as decided by the local government will invite a higher tax of 20 per cent. There will be no change on the basic rate if the road has a width of 3 m to less than 5 m or buildings that have an entrance from less than 3-m road.
But there will be a concession of 15 per cent if the building has an entrance from a walkway and up to 30 per cent if there is no proper road or electricity line in an area.
Age of the building will also have a bearing on the tax rate. No concession on will be allowed if a building is less than ten years old. There will be a 10 per cent concession on a building that is 10 to 25 years old. If the property is more than 25 years old then there will be 20 per cent concession.
Additional tax
Ornamental work in a house will also invite an additional tax. The expensive finish of the floors and the walls will invite 15 per cent more tax. Marble, granite, glazed tile or wooden finish floors and wood, plywood and other expensive wall finish fall into this category. Air-conditioning facility in the building will also invite a 10 per cent higher tax.
Usage of the property is another parameter of taxation. If the building is used by the owner, there is no change in the basic rate, but if it is given on rent, there will be a 50 per cent jump on the basic rate and a 75 per cent hike if it is used as a resort, star hotel or massage parlour.
Hence, a house in Thripunithura municipality which has an area of 100 sq.m. and is located in secondary zone with a district-level road, concrete roofing, marble flooring, brick walls and is five years old will have the following considerations on the basic rate of tax of Rs.700 (100x7):
Zonal concession: 10 per cent = Rs.70
Increase of 20 per cent because of district road = Rs.140
Concession on plinth area: 10 per cent = Rs.70
Increase of 15 per cent for marble floor = Rs.105
No concession or increase on concrete roofing, walls, age of building and usage.
Therefore, total tax = basic rate – total concession + total increase on rate (700 – 140 + 245) = Rs 805.
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