Bhubaneswar, Jan. 14: The Bhubaneswar Municipal Corporation (BMC) has revised its norms for collecting holding tax.

According to the new rules there will be only two categories of holdings to be taxed — one being occupied by people who own them and the other which have been rented out by their owners.

Earlier holding tax was also being collected from commercial establishments but now these would be included in the second category.

“Assesses in the commercial category were not coming forward to pay with their taxes whereas those in the residential category were more forthcoming. Hence, we decided to adopt the new system, which will make holding tax collection more people-friendly. As for rental premises the tax will be calculated on the basis of received per year,’’ said deputy municipal commissioner, Priyadarshi Mohapatra.

Officials said the new system would bring uniformity in the holding tax system. They said augmenting the BMC’s tax revenue had become imperative considering that the corporation was trying to provide quality service to the holding owners. “Hence it is only just and fair that a person who has rented out his holding should pay the holding tax according to the rent he received from his tenants,” said an official.

However, officials said that the corporation has decided that residential buildings already assessed for the purpose of holding tax would not be reassessed. The reassessment would have to be done only in case of buildings where the owners have gone for the construction of super-structures on their existing structures.

According to the new guidelines, residential premises would be assessed on the basis of their plinth area and construction added to the land cost but in case of apartments the land cost component would be nil. The new rules stipulate that 7.5 per cent of this amount would be taken as the annual value of the property and holding tax on this would be levied at the rate of 17.5 per cent. Likewise, in case of rented buildings 15 per cent maintenance cost would be deducted from the rent collected in a year and holding tax would be charged at the rate of 17.5 percent on this amount.

Subhranshu Rath, general secretary of Confederation of Citizens’ Associations, Bhubaneswar said the old holding tax system had been described as “ improper” even by the law department of the government. The Housing and Urban Development Department had sought the department’s views on the issue.

A senior tax advocate said that ever since 1977 not a single house within the BMC limits has been reassessed. Although other kinds of taxes including tax on street lighting increased during this period there has been no increase in the holding tax.