Home ECONOMY Property tax to replace holding tax in urban Odisha

Property tax to replace holding tax in urban Odisha

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Odisha Sun Times Bureau
Bhubaneswar, May 22:

There is bad news for property owners in towns in Odisha; the state government has planned to do away with holding tax and introduce property tax in its place in areas under all municipal bodies in the state, sources in the Urban Development department revealed.

housing scheme

Since taxation will be done on the basis of development under the new system, the income of urban local bodies is set to rise. While the exercise for its introduction is in its final stages, the Bill for the purpose is likely to be introduced in the coming session of the State Assembly.

Even if the Bill doesn’t come up in the Assembly, the Urban Development department is all set to get it implemented through the Ordinance route.

Currently, property owners have to pay holding tax in all five municipal corporations, 45 municipalities and 61 Notified Area Councils in the state. Collection of holding tax, the prime source of income for municipal bodies, has not been very encouraging. As a consequence, there are often complaints of development work getting affected.  Currently, two types of holding tax are in vogue-residential and commercial.

The issue of introduction of property tax in all municipal bodies in the state has been debated for a pretty long time.

The Urban Development department has prepared a comprehensive report favouring introduction of property tax after holding several rounds of high level meetings. The proposal has already been approved by the Cabinet.

Under the provisions in the proposal, each municipal body will be empowered to impose property tax in its area. However, the taxation rate will not be the same in all places. Each urban area will be divided into five units on the basis of development and geographical positioning. The five units are more developed, developed, developing, backward and rural.

Services rendered by the municipal authority in the concerned area like roads, recreational facilities, bus stand, railway station, airport, commercial prospects etc in the area will be taken into account while slotting an area in a category.

However, municipal bodies will not finalize these units on their own. There will be two ‘valuation boards’ at the state level for the purpose. While one of the valuation boards will determine units for municipal corporations in the state, the other will decide the units for all other municipalities and NACs in the state.

However, holding of public hearing in the local area before finalizing units has been made mandatory. The rates of tax can be revised wherever necessary after taking into consideration the opinions and suggestions of the local public.

Following determination of the unit and fixing of the rate of tax, municipal authorities will impose the property tax amount based on the measurement of the house/building.

For introduction of property tax, Odisha Municipal Act, 1950 and Odisha Municipal Corporation Act, 2003 have to be amended and a Bill for amendment of these Acts needs to be moved in the Assembly.

It’s worthwhile to mention here that property tax is mandatory under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and Urban Infrastructure Development Scheme for Small and Medium Towns (UIDSSMT) schemes of the Central government.

Since inclusion of Bhubaneswar Municipal Corporation (BMC) and Puri Municipality under the JNNURM in 2005, the Centre has sent repeated reminders for imposition of property tax in these cities. However, it remains to be implemented yet.