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Eye on roads for more property tax

Roads in the city will be reclassified after over two decades for reassessment of property tax on buildings and houses abutting them.

By end of this financial year (March 31, 2014) even vacant plots would come under the ambit of municipality tax.

State urban development and housing department has instructed all urban local bodies to initiate and complete general property tax reassessment for multi-storeyed buildings, under the provisions of Bihar Municipal Property Tax (Assessment, Collection and Recovery) Rules, 2013, by end of March.

As per municipality norms in practice in the city right now, roads in urban areas are classified into three categories — principal main roads, main roads and others.

This first revision of roads being undertaken since 1992 is likely to see most roads moving to higher category, which would, in turn, translate into higher property tax on the houses and buildings abutting them. Apartment- or flat-owners would be the first to bear the brunt of the upcoming property tax reassessment.

Supposing SK Nagar main road was a main road in 1992, the development it has seen over the past 20 years could see it getting upgraded to principal main road.

Accordingly, a building abutting this road would have to pay higher property tax after the reassessment.

Urban development and housing department secretary S. Siddharth has issued instructions in this regard to urban local bodies through a letter dated December 26.

“Upon the department’s directive, civic bodies had hiked holding tax from April 1, last year. The hike was withdrawn upon chief minister Nitish Kumar’s directive on October 9 last year.

“Since this would resulted in a dip in municipal tax collection, civic bodies have been directed to use other provisions for achieving the targeted revenue collection.

“Civic bodies have been asked to start property tax reassessment at the earliest,” a senior official of the urban development and housing department said.

Estimated property tax collection by all 141 urban local bodies could teach at least Rs 350 crore in the next financial year, 2014-15.

The Property Tax Rules, approved by the state cabinet on January 29 last year, state that municipalities should revise Holding Tax every five years.

This includes reassessment due to change in classification of roads, use, type of non-residential use, occupancy and any other changed factors. Rule No. 9 of the Property Tax Rules also prescribes collection of tax on vacant land as per specified rates.

“Instructions have also been issued to form a collection cell in all civic bodies, which would look after tax collection, especially from big defaulters. Moreover, those who paid holding tax at hiked rate would be adjusted in the holding tax collection the next year,” said the official.