Revised Building Tax Norms Draws Flak

Commercial property market has grown rapidly in the State in the past few years on the back of various factors such as the increasing retail business. The demand for commercial space has been growing in most Corporation and municipal areas.

But property developers say the revised building tax structure brought into effect in April is spoiling the party. The rules, framed in 2007 based on the total plinth area for residential and commercial buildings, had been kept in abeyance for a few years in the wake of protests from various quarters. But the government, in January this year, adopted the rules without any meaningful discussions, M. Mohammed, president, Kerala Building Owners' Association, says.

Under the provisions, building owners have to calculate their own property tax as per various norms. The tax is based on the plinth area of the building and not on the annual rental value as in the old method that came into force some 17 years ago.

Several factors have been taken into consideration for assessment of tax. A city is divided into primary, secondary, and tertiary zones. However, this practice is unfair and irrational, he says.

Besides, the new system will result in large-scale irregularities. He says a common man may find it difficult to assess the property tax. Besides, the owner has to file an affidavit at the civic body stating that the tax assessed is correct. Such a provision is unheard of in any other State. Further, if any of these details are found to be false, the owner will be subjected to penal proceedings.

Mr. Mohammed says the new rule based on zoning is complex. Existing households and building owners are confused over which zone they are in. The rule came into force when the Kozhikode Corporation had 55 electoral wards. But now the number of wards has increased to 75 with the merger of the Beypore, Cheruvannur-Nallalam, and Elathur grama panchayats with the Corporation. Property tax in municipalities and corporations are very different from that in grama panchayats.

The primary zone is an area which has a government or quasi-government office, educational institution, commercial complex, market, bus station, railway station, and major hospital. The places surrounding a primary zone with potential to evolve into developed areas will be in the secondary zone. Areas that do not come under either category will be in the tertiary zone.

The general tax rate fixed for an area in the primary zone is in the range of Rs.8 to Rs.20 a square metre (1 sq.m = 10.76 sq.ft) for residential buildings; Rs.16 to Rs.40 for industrial buildings; and Rs.32 to Rs.160 for commercial buildings. Buildings in the secondary zones will get a 10 per cent concession on rates and those in the tertiary zone, 20 per cent. Based on the locality of the building and the materials used, including roofing and flooring types, in it, age, and carpet area, an owner can get concession up to 75 per cent.

The association feels that there should at least zones based on the significance of the area and road access to the buildings. The government needs to take steps to inform the public which zone each building falls, Mr. Mohammed says.

Another anomaly is the property tax assessment based on the materials used for flooring, roofing, and walls. The rules framed almost five years ago are irrelevant. For instance, nowadays, using vitrified tiles has become common.

He says the provision against fixing tax rates on the basis of the purpose for which buildings are used is illogical.