Bhubaneswar: Even though serial lockdowns and shutdowns triggered by coronavirus have financially ruined the common man, the Bhubaneswar Municipal Corporation’s (BMC’s) decision to not provide rebate on the inflated holding tax rates has put denizens in a tight spot.
Holding tax, a major source of revenue for the civic body, is collected at the rate of 17.5 per cent of annual rent value (ARV) of a property. The ARV of properties varies based on whether it is residential or commercial. However, for reader’s convenience we would explain how ARV is calculated for a residential building.
First, the ARV takes into account the area of the property. This is multiplied by R13.65 which is the municipal tax. The calculated amount now adds 0.5 of benchmark value of land cost. The land cost varies for mouzas (tax wards) in the city. Then there is a deduction of 15 per cent on account of repair and maintenance costs. In certain cases where the holding has no establishment/building, no cost is deducted.
The problem occurred when the BMC, in October 2019, revised the benchmark value for land cost of different mouzas and effected the new rates from April 2020 onwards while complying with the instructions of the General Administration (GA) department. This resulted in an unprecedented hike in taxes with some property owners complaining about a 10 to 50 times surge in holding tax. And this happened during the coronavirus pandemic.
“Earlier, I used to pay about R800 as holding tax. However, it is now amounting to about Rs 7,000 per month. How am I supposed to pay such large sums suddenly? The civic authorities haven’t even considered the impact of Covid on the common man’s pocket, especially on people like us who barely survive on pensions,” rued Prafulla Panda, a senior citizen at Bomikhal in the City.
Sources say certain property owners who were earlier paying R2 core as holding tax annually will now have to cough up R18 crore. The new dynamics in taxes is also said to have affected small vendors and tenants who are now forced to pay more.
“I have loans adding up to R7 lakh. I need to pay R30,000 towards the salaries of my employees. Now, the BMC is asking me to pay about R20,000 holding taxes instead of R1,000 earlier. This is becoming hard as we struggle to earn profits post lockdown,” Binayak Mohapatra, a jeweller, said here.
It can be mentioned that the BMC presently has about 1,600 defaulters with outstanding holding tax dues to the tune of R43 crore. The civic authority has recently taken various measures to retrieving the dues.
Defending the civic body’s decision, BMC’s Deputy Commissioner, Revenue, Srimanta Mishra said the move was taken following the state government’s order and in best interests of the city. “Following High Court’s interim order, we have decided to collect 50 per cent of revised assessment amount while rest can be paid in quarterly or half-yearly instalments. Moreover, we have also done away with retrospective taxes and only asked for amounts from the month the order took effect. There has also been no change in holding tax rate (17.5%) except for the benchmark value,” he said.