Guide>Property Tax in Amritsar: Owners in dilemma

Property Tax in Amritsar: Owners in dilemma

April 22, 2015

AMC Property TaxAmritsar Municipal Corporation made several changes in its property tax laws and collection process over the last two years. Residents are now unclear about the current requirement because of these shifting rules. Even the fear of the hefty penalty is not inducing them to pay their property tax. For the financial year 2014-2015, Amritsar Municipal Corporation (AMC) had declared March 15, 2015 as the last day to submit property tax with rebate. The property owners paying property tax after March 31 will have to pay a penalty as well. Against the target of Rs 22 crore for 2014-15, the MC could barely collect half of it. By the end of March 31, the MC could collect only Rs 11.77 crore.

In 2013, the AMC was in financial doldrums. It was looking for drastic ways of improving the state of its coffers. That was when it introduced the Property Tax to residential properties in Amritsar for the financial year 2013-2014. Earlier, commercial properties had to pay a 15 percent property tax; this was brought down to 3 percent in the same year. The AMC estimated the new residential property tax to bring in Rs.60 crores from 11.27 lakh people in three lakh properties, 30000 of which were commercial properties. The Commissioner of the AMC reiterated that this money was to be used for development in residential areas as well as improving infrastructure of the city.

Property tax payment simplified

The municipal machinery approached this whole exercise in a planned manner. Amritsar was divided into eight zones for this purpose. Three-member teams of tax collectors set up payment centers in each of these zones.

The payment mechanism was also simplified, with bank transactions and online payments being made available. An inquiry office was opened in the AMC office for this purpose. The whole process promised to maintain electronic records, which was a marked improvement from the error-prone manual process the AMC was following till then.

People who owed 50 square yard houses had to pay Rs.50 as property tax, while houses sized at 100 square yards were taxed at Rs.100 per year. However, houses above 100 square yards were taxed between Rs.1000 to Rs.1500 per year. The AMC offered a rebate on the tax of payment was made early, and penalties if late payment was done.

New notification brought a big dent to the revenue of the MC

According to the new format applicable from 2014-2015 in the state, Residential properties which are single storied and less than 125 square yards are exempt from paying property tax. Similarly, vacant sites have also been excluded. This reduces the number of taxable Amritsar residents by 1.30 lakhs. All this means that AMC is looking at a reduced pool of taxpayers. Added to this reduction is the number of defaulters. The defaulters from last year have also not paid, and if you add the number of defaulters this financial year, the AMC is looking at a huge deficit.

It is clear that the changing rules of AMC are doing more harm than good, both for the public as well as for the returns. It is high time that AMC resorts to some innovative and proven collection methods to ensure that the payment methods are easy and convenient.

Owners feel they are penalized for the misconduct of the AMC

The residents of Amritsar did not take to this new tax well. The general murmur of discontent pointed a finger at the AMC. Residents wanted to know why the corporation was not using its existing funds in a disciplined manner. They felt they were being penalized for the misconduct of the AMC, and that the taxes they were already paying should be used for all these purposes. In spite of all these focused activities, the AMC collected only Rs.24.5 crore as property tax in 2013-2014, well short of the anticipated target.

It remains to be seen how the AMC can recover property tax from these defaulters. Will it use a door-to-door collection mechanism, or some other innovative method to ensure that its coffers are full enough to execute all the development plans it has for Amritsar city?

 

Read More:

Amritsar Real Estate Market Overview

Posted by

Policy & Regulation Expert
Commonfloor