THIRUVANANTHAPURAM: The government has withdrawn the much-ridiculed decision to levy taxes on houses lying vacant in the state. Finance Minister K N Balagopal told the assembly on Wednesday that the budget announcement will not be implemented in view of the concerns raised by non-resident Keralites (NRKs).
It was also pointed out that the move, originally a recommendation by the state finance commission, would hit the real estate sector. The decision had drawn flak from all sections of society, and was subject to several trolls on social media that highlighted the impracticability of the decision.
Replying to a submission by Thiruvanchoor Radhakrishnan (Congress), Balagopal said, “It was part of tax proposals to ensure that shortage of funds does not affect the smooth functioning of local self-governments... Expatriates raised concern over the proposal. Anyhow, they will not be implemented now.”
Earlier, Thiruvanchoor said the proposal did not consider the situation that forced people to leave their houses vacant. Lot of people in are living at their work places outside the state. The government is neither giving any security to their houses nor insurance coverage. The proposal to charge tax from vacant houses is wrong and should be repealed, he said.
It has also been decided to abandon the proposal to bring ownership of multiple houses under the tax regime. The proposal was based on a recommendation by the Sixth Finance Commission. It had said that the vacancy remission given to houses was unjust. “Vacancy remission may be limited to 50% of the tax for one building, and if an owner has more than one building, such buildings should attract the full property tax,” it said. The minister’s announcement has come as a big relief to NRKs.
Proposal aimed at mobilising Rs 1K cr
The budget proposal was among the measures suggested to mobilise Rs 1,000 crore for local bodies.
Welcoming the announcement, S Krishnakumar, member, CREDAI-Kerala governing council, said the proposal, if implemented, would have affected the prospects of the real estate sector. “Many people invest in real estate as it is safer than other options like the stock market. The new tax would have forced them to make investments in other states.”
The government too would have suffered huge loss as it gets about 30% of the sales value of any real estate project as various taxes and fees,” he added.
NRK businessman and NORKA-ROOTS director C V Rappai also welcomed the decision. “NRKs are the biggest beneficiaries of the government decision to withdraw the new tax proposal. All NRKs dream of a house in their native place. But they may not be able to live there as long as they work abroad. Also, real estate is a much-preferred investment option of NRKs,” he said.