CHENNAI: Failure to revise property tax, the primary source of revenue for urban local bodies, resulted in a loss of Rs 2,598.2 crore for the civic bodies in Tamil Nadu, according to a Comptroller and Auditor General of India (CAG) report tabled in the Assembly on Thursday. The loss was assessed for a period of five years (2013-2018).
Property tax was revised in 2018 after a gap of 20 years for the Greater Chennai Corporation (GCC) and 10 years for other local bodies. The revisions, however, were rolled back a year later. “Had the revision taken place periodically, the impact of the revision in 2018 in the form of a sudden rise in property tax would not have been felt by the public, which forced the government to withhold the revision,” the report said.
The State government had said then that the Tamil Nadu District Municipalities Act, 1920, needed to be amended to make revision of property tax mandatory every five years and a proposal was sent. The CAG report called the government’s response ‘not acceptable’.
Re-measurement and re-classification of properties, too, could have helped review properties that have not been assessed or under-assessed, bringing in additional revenue, the report said. “Audit observed that the corporations (except GCC) and municipalities found that there were cases of underassessment and misclassification in the properties, resulting in the loss of revenue of Rs 98.89 crore per annum,” the report stated.
Tax collection percentages
Listing the demand and collection of property tax, the report said the overall property tax collection percentage with respect to demand for three years (2017-2020) was only 55 per cent. The collection by corporations (except GCC) ranged between 40.9 per cent and 53.5 per cent. For municipalities, it was pegged at 46.16 per cent and 57.8 per cent and for town panchayats, between 63.65 per cent and 69.06 per cent.
The collection percentage of the Chennai corporation came down from 62.2 per cent in 2017-18 to 43.9 per cent in 2019-20, the report said. As on March 31, 2020, the arrears of revenue, including property tax for urban local bodies, were at Rs 2,847.53 crores, indicating the need for ‘improvement’ in revenue collection performance. Arrears in property tax for the Chennai corporation alone were at Rs 604.8 crore.
Number game
Rs 1,323.6 cr Losses due to delay in revising property tax for municipalities and corporations (except GCC)
Rs 964 cr Losses for GCC
Rs 310.5 cr Losses for town panchayats