Indian Citizens' / Netizens' Forum

Indian

Many residents will not be able to pay property tax for 2005-06: MGP

Friday, Nov 11, 2005

http://www.thehindu.com/2005/11/11/stories/2005111108060300.htm

Series of incongruities identified in the rules formulated for tax collection

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Amendment to KMC Act does not provide for 50 per cent rebate given to property owners
Local bodies told to ensure that property tax for 2005-06 is not less than that of 2004-05
Property owners likely to move court against violation of law

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MYSORE: Discrepancies in the revision property tax laws carried out by different government agencies have confounded the prevailing confusion over payment of property tax here.

Identifying a series of incongruities in the rules formulated by the Department of Law, Directorate of Municipal Administration, Department of Stamps and Registration and the Mysore City Corporation, the Mysore Grahakara Parishat (MGP) apprehended that most residents of Mysore will not be able to pay property tax for 2005-06.

In a press release, MGP convenors B.V. Shenoy and C.V. Nagaraj said the amendment to the Karnataka Municipal Corporations Act, 1976 (KMC Act), concerning the Self-Assessment Scheme (SAS), passed by the State Government earlier this year, does not provide for the 50 per cent rebate given for property owners for self-occupancy.

"It appears that the Department of Parliamentary Affairs and Law that

drafted the latest amendment had not even read the Act they were amending, and hence, unaware of the provision pre-existing under Section 109 A allowing rebate for self-occupied buildings. Their ignorance of law might cost property owners the 50 per cent of rebate they were entitled to," the MGP said.

The MGP contended that the Directorate of Municipal Administration, which issued a circular to local bodies directing them to base property tax only on 50 per cent of the property guideline values, had contradicted the amended KMC Act, which stated that the taxable capital value of the properties are the full property guideline values published under Section 45 B of Karnataka Stamp Act, 1957.

The circular instructs the local bodies to ensure that the property tax fixed for 2005-06 is not less than the tax for 2004-05. But, the Mysore City Corporation, taking a stand that it cannot implement the circular,

Citizen Says : 2006-03-05 11:00:25.0

had written back to the directorate, contending that it will continue to collect property tax at 2004-05 rates. Though the latest amendments exempt the land around buildings from property tax, which will witness a reduction in the tax, the corporation, it is understood, will deny these benefits to the people, given by the law of the land.

Referring to the recently completed revision of property guideline values in Mysore, the MGP pointed out that guideline values had increased steeply in most parts of the city. "We understand that the Registrar's office, probably fearing a backlash from property tax payers, has added a provision that the revised guideline values apply only to determine the stamp duty on property transactions and not for fixing property tax," the MGP said. "This is again in violation of the KMC Act, which clearly states that property tax should be based on the guideline values published by the

Citizen Says : 2006-03-05 15:43:22.0

Registrar, and the Registrar's office cannot say that the guideline values published by it cannot be applied for determining property tax," Mr. Shenoy and Mr. Nagaraj said.

The MGP said the confusion resulting from "wholesale" violation of the law by several government bodies will force many property owners here to desist from paying property tax for 2005-06. Any move to compel property owners to pay tax will certainly be challenged by lawsuits.

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Star Of Mysore, Saturday, November 19, 2005

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Property Tax: A total violation of law

By B.V. Shenoy and C.V. Nagaraj, MGP

Does anyone in the Government know what the law is?
Does anyone in the Government follow the law?
Does any one care?

Amendments to the sections concerning SAS property tax in the Karnataka Municipal

Citizen Says : 2006-03-05 15:46:06.0

Corporations Act, 1976 (KMC Act) were passed by the Karnataka legislature earlier this year. They were gazetted on 7-3-2005 and are fully effective from 1-4-2005.

Consequently, the Directorate of Municipal Administration of the Karnataka government has issued a circular to all local bodies in Karnataka. Mysore City Corporation, it seems does not want to implement the circular.

In the meanwhile, the Registrar for Mysore District has revised the guideline values for properties in Mysore city. All the authorities in this sequence of events are either ignorant of the law or are violating the law. This raises a very disturbing question: Does any one in the Government follow the law or even know what the law is? Tughlaq would have been proud of our administration! Let us see first-hand this colossal ignorance and disregard for the law by the various government bodies.

Citizen Says : 2006-03-05 15:49:36.0

1. The Department of Parliamentary Affairs and Legislation

The amendments gazetted on 7-3-2005 say that after section 109 of the KMC Act, the following new section shall be inserted, namely:-

109A. Enhancement of property tax.- Notwithstanding anything contained in section 108 and 109, the property tax assessed and levied under either provision shall not be assessed each year thereafter but shall stand enhanced by 15 percent once in every three years commencing from the financial year 2005-2006:

Provided that the Municipal Corporation may enhance such property tax upto 30 percent once in three years and different rates of enhancement may be made to different areas and different classes of buildings and lands:

Provided further, that the non assessment of property tax under this section during the block period of three years shall not be applicable to a building in respect of which there

Citizen Says : 2006-03-05 15:53:00.0

is any addition, alteration or variation to it. Provided also that nothing contained in this section shall be deemed to affect the power of State Government to direct an earlier revision of property tax.

But, unfortunately, there was already a Sec. 109A in the KMC Act introduced by Karnataka Act No. 31 of 2001 (gazetted on 13-9-2001). This subsection read: 109A. Rebate for self-occupied building: A rebate at the rate of 50% of the property tax shall be allowed in respect of any building or part of a building which is occupied by the owner of such building.

New Sec. 109A

So it appears that the Department of Parliamentary Affairs and Legislation which drafted the latest amendments had not even read the Act they were amending and hence were unaware of the preexisting Sec. 109A. By introducing a new Sec. 109A, they have sent to limbo the earlier Sec. 109A. So their ignorance of the law might cost

Citizen Says : 2006-03-05 15:56:10.0

thousands of property owners the 50 per cent rebate given for self-occupancy.

2. Directorate of Municipal Administration

The Directorate of Municipal Administration has issued a circular ( No. Pou Ni SAS/56/05-06 dated 2-9-05 ) consequent to the implementation of the latest amendments to the KMC Act. In this circular, it orders all local bodies to base their tax on only 50 per cent of the property guideline values. This is in clear violation of Sec. 109 of the law which says that taxable capital value of properties are the full property guideline values published under Sec. 45B of the Karnataka Stamp Act, 1957. The recent amendments had doubled the tax rates for residential properties and the circular seeks to undo (illegally) this part of the law. Passing a law to double the tax and then immediately undo-ing the tax increase (illegally) through a circular shows how lightly our lawmakers and the

Citizen Says : 2006-03-05 15:59:59.0

government treat the law.

Violation

The circular also instructs the local bodies to fix the property tax for the year 2005-6 so that it is not less than the 2004-5 tax. This again is a violation of the law. Local bodies such as the City Corporation can levy property tax on the citizens only through the power given to them by the KMC Act. The Act has provisions that can reduce the tax compared to previous years. The Act does not say that the tax for the year 2005-6 should not be less than the tax for the year 2004-5. This condition can not be imposed by any circular or decision of the local body.

3. Mysore City Corporation

We understand that Mysore City Corporation has written back to the Directorate of Municipal Administration that it will not implement the circular this year since several residents have already paid their property tax. MCC has collected and will continue to collect property

Citizen Says : 2006-03-05 16:03:53.0

tax at the 2004-5 rates. This again is illegal. The Act has clearly laid out the framework under which the tax has to be collected and since it came into effect fully on 1-4-2005, MCC has no option but to follow it. The latest amendments exempt the land around buildings from property tax and so the tax of many residents is likely to go down compared to last year. MCC can not deny these benefits to the public given by the law of the land.

4. The Registrar for Mysore District. The Registrar's office has just now completed a revision of the property guideline values. As a result, the guideline values have increased steeply in most parts of Mysore city. We understand that the Registrar's office, probably fearing the backlash of property tax payers of the city, has added a provision that the revised guideline values apply only in determining stamp duty in property transactions and not in determining property tax.

Citizen Says : 2006-03-05 16:09:18.0

This again is illegal since the KMC Act clearly states that the property tax should be based on the guide-line values published by the Registrar and the Registrar's office cannot say that the guide-line values published by it cannot be applied to determining the property tax.

Conclusion

In this total confusion resulting from wholesale violation of the law by several government bodies, we believe that many residents of Mysore will not pay property taxes for the year 2005-6 and MCC will not be able to force them to pay. MCC and the state government have committed several major lapses in implementing the law and any compulsion to pay the property tax will be certainly challenged by a whole slew of lawsuits.

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Tuesday, February 28, 2006

MCC issues notice on property tax
Citizen Says : 2006-03-05 19:12:28.0

http://www.hindu.com/2006/02/28/stories/2006022812250300.htm

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The Mysore Grahakara Parishat (MGP) has called for superseding the corporation for demanding immediate payment of property tax and threatening force if the tax is not paid.

In a release, P.M. Bhat of the MGP said that corporation officials are demanding that the citizens pay the same tax they paid last year (2004-5) and are levying a late payment penalty of 2 per cent a month from June 2005.

As a result, if the tax is paid now, it will attract a fine of 14 per cent. The parishat said this is a "flagrant violation" of the law, considering that sections concerning property tax have been amended with effect from April 1, 2005.

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Star Of Mysore, Monday, February 27, 2006
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Citizen Says : 2006-03-05 19:16:09.0

VOICE OF THE READER

A CASE FOR SUPERSEDING MYSORE CITY CORPORATION
Sir,

Mysore City Corporation is distributing pamphlets to the citizens of Mysore demanding immediate payment of property tax and threatening legal action if the tax is not paid.

MCC officials are demanding that the citizens pay the same tax they paid last year (that is 2004-05). They are also levying a late payment penalty of 2 per cent a month from June 2005. As a result, if the tax is paid now, it will attract a fine of 14 per cent.

MCC is flagrantly violating the law. Sections concerning the property tax have been amended with effect from 1.4.2005, but MCC is refusing to implement the amendments which have been passed by the Karnataka legislature and published in the Karnataka Gazette of 7.3.2005. Therefore, it is violating the Karnataka Municipal Corporations Act, 1976. It is not just violating

Citizen Says : 2006-03-05 19:19:24.0

the law, but also threatening the citizens with force if they do not aid and abet the violation of the law. This is especially galling to the law-abiding citizens since MCC is taking little action against certain group of defaulters.

If the Corporation makes default in the performance of any of the duties imposed on it by any law in force, Sec. 99 of the KMC Act, 1976 empowers the State Government to dissolve the Corporation. This seems a fit case for the State Government to exercise its powers.

-P.M.Bhat, MGP Convenor on e-mail

Mysore

23.2.2006

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Star Of Mysore, Saturday, October 29, 2005

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Corporation's property tax and the tax payer

By S.G. Vombatkere
The Municipal Corporation is created to provide the City with civic services, and the Corporation raises revenues by

Citizen Says : 2006-03-05 19:22:40.0

means of taxes, tariffs and cesses, in order to do so.

Current practice is to levy Property Tax (PT) for residential and commercial property. Hit-herto, PT was being assessed on the basis of Annual Rental Value (ARV), but the basis has been recently changed to Capi-tal Value (CV) with a Self Assessment Scheme (SAS) for improving compliance. However, it is understood that compliance of PT payment is just around 30 per cent.

The scheme of PT evaluation has resulted in citizens' PT liability multiplying manifold, and the new regulations ensure that PT keeps increasing every three years, bringing an unbearable burden on citizens. There have been many agitations by citizens against the high PT according to SAS, resulting in non-payment of PT on the one hand, while on the other hand realisation of PT by the Corporation remains poor. Services provided by the Corporation too remain woefully poor and inadequate

Citizen Says : 2006-03-05 19:24:56.0

due to continued mismanagement of meagre funds.

In the context of Mysore, lack of funds has been exacerbated by the fact that Mysore City Corporation (MCC) is unable to pay the interest and principal installments to KUIDFC to service the ADB loan of Rs. 130 crores, and has defaulted for three years running. This impasse has brought Mysore to the brink of urban decay.

Two issues arise at this juncture. First, there has been a recent very steep increase in land values in Mysore, and computing market value of land based on registration value of land at the Sub Registrar's Office will increase PT liability to unaffordable levels. This has been strongly opposed by hundreds of citizens in Mysore on October 22, 2005, and is likely to further harden the current impasse.

The second is that MCC col-lects PT to provide services, and tax should therefore be based upon the services that MCC provides and upon

Citizen Says : 2006-03-05 19:27:36.0

the services that each residence or commercial establishment draws or uses. Basing the tax payable upon the capital value of the property (CV) or on the rent that the property might fetch (ARV) is incorrect.

Indeed the name " Property Tax " should be changed to " Corporation Tax " or " Civic Service Tax ", and should be calculated based upon factors such as number of residents on a property, width of the road, quality and extent of water supplied, sewerage and garbage collection services provided, etc. There is no logical connection between the civic infrastructural services to be provided, drawn and used, and the value of the property, and hence no justification for the term " Property Tax ". Government should work out a formula for computation of Corporation Tax or Civic Service Tax in consultation with citizens' groups.

The mushrooming of multi-storey buildings in Mysore is increasingly stretching

Citizen Says : 2006-03-05 19:30:31.0

existing already over-stretched infrastructure, thus lowering the standards of already poor civic services. At the same time, with steeply rising PT (especially after valuing land based upon registration value), owners of independent plots are finding PT liability impossible to meet and are selling out to real estate developers for more multistorey buildings to come up. This further aggravates the problems of water supply, sewerage, garbage collection and disposal, electric power, transportation, etc.

Thus, Mysore is accelerating down the slope of " high PT " sale of property to real estate developers " construction of multi-storey buildings " more pressure on infrastructure ". The only solution for MCC to provide civic services and also meet the ADB loan liability is to abolish PT and ensure 100 per cent compliance of recomputed Corporation Tax or Civic Service Tax levied at reasonable rates. Attempting to
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