Bhubaneswar, April 23: The municipal corporation's standing committee on taxation wants inclusion of revised land rates to calculate holding tax. If the recommendation gets the approval of the corporation's council and the state government, holding taxes will witness a quantum leap.

The committee submitted its recommendation to mayor Ananta Narayan Jena yesterday.

Till date, holding tax is calculated on the basis of land cost as decided by the general administration department (GAD) in 1997. However, the GAD's revised land value of 2014 (see chart) is yet to be considered for tax calculation.

Taxation standing committee chairman Seikh Nizammudin said: "The civic body is now passing through a critical phase in which the expenditure is going up but the collections don't match up. We need to take measures so that the revenue increases to meet the new challenges.''

On an average, the civic body collects holding tax to the tune of Rs 20-22 crore a year. In the last fiscal it had collected Rs 25 crore. Once the revised land cost is included to calculate holding tax, the collection will go up manifold.

Moreover, the standing committee on taxation has proposed area specific land rates instead of the present system of taking into consideration uniform value while calculating the holding tax.

If the proposal is implemented, a person owning a 1,000sqft house/flat will find a huge leap in his tax bill.

For example, at present a person living in a 1,000sqft flat/house in Kharavela Nagar pays Rs 120 towards holding tax every year. The proposed formula will, however, push his annual tax to Rs 1,200. This is because in 1997 the benchmark price of Kharavela Nagar was Rs 30 lakh/acre, while now it has climbed up to Rs 12 crore/acre.

However, the holding tax for a 1,000sqft house/ flat in Ganganagar will be different from those in Kharavela Nagar. If a person is paying Rs 60 a year for a 1,000sqft accommodation in Ganganagar, the new calculation will make him shell out Rs 500 or more. This is because the area's benchmark value in 1997 was Rs 15 lakh, but now it has reached Rs 8.05 crore.

Nizammudin further said that in case of calculation of holding tax in residential and commercial holdings, 0.05 per cent of the land cost is further added to it.

"We have sent our recommendation to the mayor so that the process will start to include the revised land cost,'' he said.

Reacting to the recommendation, Jena said: "The taxation standing committee's proposal will be sent to the tax section of the corporation for analysis. If they find it right, it will be placed in the council. Once ratified, it will be sent to the state government's housing and urban development department for final nod. If the proposal gets the government's approval, it would be implemented from collection.''

However, the mayor clarified that if implemented it would not have any retrospective effect.

Councillors are almost unanimous in criticising the delay in shifting from the holding tax regime to property tax. After Bhubaneswar became a corporation in 2003, it should have been collecting property tax instead of holding tax. However, this has not happened as the Property Tax Bill is yet to be passed in the Assembly. This is causing revenue loss to the corporation.

"We are losing around Rs 70 to Rs 80 crore a year for this lacunae. As the Property Tax Bill is yet to be passed by the Assembly, calculation of holding tax based on present land rates will partly compensate the corporation's loss,'' a senior councillor said.

Resident of Bhimtangi and former councillor Chhabindra Jena said: "The civic body has failed to carryout a detailed survey on the number of holdings. While the civic body is collecting tax from nearly 88,000 holdings, a fresh survey may add more than 20,000-22,000 houses. The corporation should begin it with immediate effect.''

In another development, the civic body has decided to implement users fee for collection of solid waste from houses and institutions for better the fiscal health.

"We strongly oppose the earlier proposal to include the solid waste contractors in this collection business. Already it is a known fact that the contractors are adopting various means to charge the corporation more for their day-to-day services. You cannot turn a poacher into a gamekeeper,'' said Nizammudin.

Pocket pinch, Bhubaneswar Land rates and the formula