New Penalty Provision Introduced by Government to Boost Property Tax Collection
Greater Visakhapatnam Municipal Corporation (GVMC) has introduced a new penalty provision to boost its collection of property tax. This penalty is simple interest of 2 per cent on property tax for half a year, if the tax has not been paid by the end of the first quarter of that year. What this essentially means is that if a property owner does not pay property tax for the first half-year by the end of June of that year, the interest is levied from November every month; and for the second half-year, the tax should be paid by the end of the month of December.
The penalty provision was introduced in the First provision to Section 269(2) of Act 1955 & Second provision to Section 91 of the AP Municipalities Act 1965. The earlier clause imposed the penalty interest only after the end of the first-half of the year. The new provision has an attractive early bird offer – if the property tax for the whole year is paid in the month of April itself, the assesse can claim a 5 percent incentive.
Greater Visakha Municipal Corporation (GVMC)
GVMC came into existence in November, 2005. It has a total number of 72 wards consisting of the earlier Gajuwaka Municipality and other villages and panchayats. Greater Visakha has many large industries that operate in its limits – Visakhapatnam Steel Plant, the Bharat Heavy Plate and Vessels and the Hindustan Zinc, now a part of the Sterlite group. In previous years, the GVMC has undertaken several initiatives to boost its property tax collection. It had increased the property tax several years back, and had also launched mobile vans for property owners to pay their taxes conveniently, as well as introduced online payment facilities. It conducted a study to obtain property data from the Geographic Information System (GIS), and also undertook a Building Penalization Scheme (BPS) for properties where occupancy certificate was not produced and where the Town Planning Department identified unauthorised constructions. Revenue officials were also given tablet PCs for physically verifying property measurements and validating the property tax then and there, in order to avoid later legal wrangles.
GVMC witnesses good collection
This year, the GVMC saw a huge spike in the collection of property tax in January 2015. This was because of several factors. Firstly, Municipal Commissioner Pravin Kumar launched a special drive on January 19 for property tax collection. Bill collectors, recovery officials and revenue inspectors went around in all the zones of the Municipal Corporation the whole day for the remaining days in January to ensure that the tax was paid. February 1 would see an increase in the interest amount, hence many paid their property taxes by the end of January itself. The tax collection for the last twelve days of January was Rs 12.44 crores, of which Rs 2.62 crores was paid up on January 31, the last day before the interest went up. The main commercial area of Greater Vishakhapatnam, Zone II, accounted for Rs 95 lakh on January 31.
In spite of all these advances by the GVMC towards collection of property tax, the remittances for the current fiscal year stood at only Rs 93.09 crore against the total requirement of Rs 186 crore. This was at the end of January 2015, and even though there are two more months to go for the financial year to end, we see that almost half of the demand was not reached.
Some issues were cited last year for the roadblock in collection of all the budgeted property tax, and the same should apply this year too. One reason was the number of property-tax associated legal cases that were in court due to some dispute. Another was the pending service charge from Central Government companies and public sector companies, where the service charge was in lieu of property tax. Minority institutions in the Municipality are also seen as defaulters in payment of property tax.
It remains to be seen if the GVMC can recover the large amount of property tax due to it before the end of the financial year in March.
AP Municipalities Act 1965, Building penalization scheme, Greater Visakha Municipal Corporation, Greater Visakhapatnam Municipal Corporation, GVMC, Town Planning Department
