THIRUVANANTHAPURAM: The proposed revision in property tax collected by local self-governments based on the recommendation of the sixth finance commission is expected to be of immense support to local self-governments on the revenue front. Lowering the taxation eligibility of buildings from the present 60 sq m to 50 sq m will see more buildings coming under the tax net.
But certain taxpayers would find the lowering of the tax net still attractive. “Because, at present, buildings below 60 sq m can avail of the exemption only if it is used for residential purposes. But the proposed reform is to charge half the normal rate for all buildings with 50 sq m to 60 sq m area irrespective of their use. The proposed additional tax for luxury buildings, i.e., buildings above 3,000 sq m will substantially increase the revenue of LSGs,” said a source in the local self-government minister’s office.
Kochi Mayor M Anilkumar said a few of the suggested recommendations, like maintaining online data on property tax collections and details have already been implemented by the corporation. He said the proposals for higher entertainment tax, setting up local authorities loan act and giving the power to the local body to the avail licence fee for roadside advertising and billboards will help the local bodies increase their revenue.
Economist and chairman of the Fifth Finance Commission, B A Prakash, said a rate revision in property tax was welcome though late. “No significant revision happened in property tax for over two decades. Based on elaborate consultations, the fifth commission first recommended a revision in property tax and other income avenues of LSGs. The government approved the recommendations but did not show sincerity to implement them,” he said. However, Prakash said, the recommendation for annual revision will face practical difficulties.
The annual increase in property tax will push families into distress, feels Paraniyam Devakumar, patron of the Fraternity of Residents’ Associations Thiruvananthapuram. “This will increase the burden of families that are yet to recover from the adverse financial impact of the pandemic. The government should not push people into distress like the banks which now collect interest for moratorium periods of loans,” he said.
Director B Unnikrishnan said the decision will make cinema halls unaffordable to more people. “Already super star films draw a good audience. Small films are not getting a sufficient number of viewers and collections. If the ticket charge goes up, more people will opt to wait for OTT rather than going to cinema halls,” he said. At present, the tax levied by LSGs is 5 pc for tickets priced up to Rs 100 and 8 pc for tickets priced up to Rs 100. 18 pc GST is levied on the total amount.