Where the property lies will dictate what the property tax is. Calcuttans must be prepared to pay property tax depending on the area they live in, mayor Subrata Mukherjee warned on Sunday.
The new tax calculation formula, according to Mukherjee, will achieve a twin target — rake in more revenue and rein in the rogue tax inspector.
The tax structure will now be based on geographical location of the property. The Calcutta Municipal Corporation (CMC) will have its own declared rates of valuation of a property in a particular location and 40 per cent of the annual valuation will be billed as tax.
“Our new tax system will bring an end to the existing inspector raj,” said the mayor. At present, the inspector carries out valuation of a property on the basis of the annual rent it can fetch. Some take arbitrary decisions on what the rent of a building or flat should be and, often, record a low rent for a “fee”, so that the tax remains low, alleged Mukherjee.
The new system of property-tax collection is expected to be formally proposed during the two-day seminar organised by the British funding agency, Department for International Development (DFID), later this week. The mayor will seek financial help from the DFID to carry out a survey before dividing the city into zones to implement the new tax structure.
While the highest rate has been tentatively fixed at Rs 5 per sq ft, the lowest will be Re 1 per month. There will be an annual two per cent rise in tax rates.
At present, an inspector can fix the rent per sq ft anywhere between Rs 1.50 and Rs 5, or the value can be fixed at 7.5 per cent of the stamp duty paid, or at a high rate on the basis of a statement made by a neighbour of the house/flat-owner.
The rent can also be fixed at a low of 50 paise (by citing the instance of an old rented house in the locality), or a high of Rs 5 (by citing a tenant in a nearby house, who pays Rs 5,000 as monthly rent).
Under the revised system, the owner of a 1,000 sq ft flat in prime areas like Park Street or Gariahat, Rashbehari Avenue or Sarat Bose Road, will have to shell out the maximum of Rs 5 per sq ft per month. The annual valuation works out to Rs 60,000, of which 40 per cent, Rs 24,000, is the property tax.
The mayor said the new system of property-tax collection is expected to come into play from the next financial year. He said the revised system would net the cash-strapped CMC an additional Rs 100 crore annually as property tax.