Cuttack, March 19: The civic body will impose penal interest on property tax defaulters, including hospitals such as SCB Medical College and Hospital and Sishu Bhavan.

"We will impose 10 per cent penal interest on holding tax arrears if it is not cleared by March 31. A notice will be issued on this within a day or two," said municipal commissioner Gyana Das.

"Pending holding tax arrears are taking a massive toll on the civic body's earnings as it has mounted to a whopping Rs 35 crore. Government establishments are our main concern as they have a Rs 30 crore share of the total default arrears," Das said.

"The SCB is the biggest holding tax defaulter with Rs 27 crore arrears pending against it, followed by the Sishu Bhavan and the Acharya Harihar Regional Cancer Centre with arrears of Rs 1 crore each," he said.

Holding tax is the civic body's main source of revenue with the annual collection targets set at Rs 4 crore. But, the Cuttack Municipal Corporation had managed to collect around

The civic body has set an ambitious target of collecting Rs 7 crores holding tax in 2016-17. CMC's Standing Committee for Taxation, Finance & Accounts is hopeful to meet the target taking into consideration the increasing trend in annual property tax earnings following launching of a special drive for assessment of new holdings for collection of the tax in the last two years.

"In fact, during the current fiscal year, we have been able to collect till date around Rs 5.5 crore, which is over 90 per cent of the target", Ajay Barik, Head of the Standing Committee told The Telegraph today.

"Enhancement in the annual rental value for commercial and residential establishments for holding tax had also helped in increasing the property tax collection", Barik said.

CMC officials said owners of properties - land and building are liable to pay Holding Tax @ 20.5 per cent of the annual rental value of the holding depending on the nature of holding - either residential or commercial.

In 2015, the annual rental value for residential buildings was increased from Rs 2 to Rs 3 per sq ft in case of buildings up to two storied and Rs 2 to Rs 3.50 per sq ft in case of three storied and above buildings and apartment building, while it remained unchanged ( Rs 2 per sq ft) for thatched, asbestos and tin house.

Earlier in 2014, the annual rental value was increased for small shops it has been increased from Rs 5 to Rs 10 per sq ft. Kalyan Mandaps, Gold shops, Nursing homes, Hotel & Lodging, etc. were charged Rs 15 per sq ft instead of Rs 7 and Rs 25 per sq ft instead of Rs 10 for Banks, Insurance Companies & Show Rooms.

The annual rental value for pathological laboratories & diagnostic clinics has been increased from Rs 7 per sq ft to Rs 20 per sq ft, while for colleges and English medium schools it has been increased from Rs 5 to Rs 10 per sq ft and from Rs 5 per sq ft to Rs 7 per sq ft respectively, official sources said.