Constitution of State Property Tax Board
Based on a study of 36 cities, the Commission noted wide inter-city variations in the collection of property tax. Average per capita property tax revenue in 2006-07 in the study cities was Rs. 486, while highest per capita was Rs.1,334 in Mumbai and the lowest was Rs.1,334 in Patna. Based on the study, the Commission projected that the property tax revenues at all-India level could be between Rs.6, 274 to Rs.9, 424 crores. It noted that the improving coverage and collection efficiency to 85% without changing any other variable, the property tax revenues could increase to Rs.22, 000 to Rs. 32, 000 crores.
The Commission noted that there is tremendous scope for improvement in revenue from property tax without increasing the rates and without any structural alteration of the basis of levy. It desired that the urban local bodies should complete formal registration of all properties – whether assessable or not – and follow it by assessment of all registered properties. Noting that the real potential of property tax lies in correctly assessing the property values and choosing appropriate rate structure, it suggested that an appropriate strategy should be designed and it should include broadening the tax base by instituting GIS for mapping properties in all cities with more a lakh population, establishing a central valuation board, and improving collection efficiency, identifying tax evasion and delinquency and enforcing penal provisions.
The Commission examined the organisation working of Municipal Property Assessment Corporation, Ontario, Canada and West Bengal Valuation Board, India which assist the municipalities in the assessment and valuation of properties for the levy of property tax. The Commission noted that the ‘MPAC provides a fine example of how municipalities can combine to avail high value services aimed at enhancing the efficiency of their main stay – property tax collections’.
The Commission recommended for the establishment of a state level Property Tax Board, ‘on the lines of West Bengal Valuation Board’, to standardize property valuation. It should be charged with setting guidance values and subsequent updating. The Board would be responsible to:
- enumerate or cause to enumerate all properties within the jurisdiction of the municipalities and corporations;
- review the present property tax revenue system and make suggestions for proper assessment and valuation of properties; and
- recommend modalities for periodic revisions.
The Board will assist the urban local bodies to put in place an independent and transparent procedure for assessing the property tax. It will communicate its assessments along with suggestions and recommendations to the respective urban local bodies for necessary action. This will take the levy of property tax, which is a very important source of revenue to the local bodies, from the local politics.
The Commission recommended that at least 25 % of the estimated number of properties in all the urban local bodies should be covered by 31 March, 2015. The details of the organisation and modalities of work should be worked out by the state governments.
Compliance to this recommendation would be ascertained through passage of legislation or issue of executive instructions as well as publication of the work plan of the Board in the state gazette.
- What prevents the ULBs to undertake the effective assessment, valuation and collection of properties?
- Will the ULBs be able to effectively collect the property tax if the valuation is centralized? Are the ULBs adequately equipped?
- Central valuation requires the cooperation and support of the ULB at every step. How to ensure such support from the ULBs?
- Should the valuation of properties by the Board be made mandatory or the ULBs are given discretion to outsource the function to the Board?
- Should the Board be equipped to monitor the collection of property tax also?
- If the valuation by the Boards not accepted and collected by the ULB, how it affects the next round of valuation?.
- How to ensure coordination between the Board and Directorate of Local Bodies to ensure smooth valuation process?
- Computerization facilitates the valuation and collection work and contributes to transparency. What is the status on computerization in ULBs?
- How the costs of the Board be met? Allocation by the Government or contributions by the ULBs based on the quantum of work?
- How to ensure the autonomy of the Board, financially and administratively?
- What training and capacity building efforts are required at Board and ULB levels to equip the officials on valuation and collection process?
- What educational efforts are required to bring awareness to public on the valuation process to ensure their cooperation?
- Relevant Material
The West Bengal Valuation Board Act 1978
Hand Book on Central Valuation Board West Bengal Act - 1979
Amendments in the West Bengal Central Valuation Board Valuation of lands & Buildings) Rules 1984 *
The West Bengal [Valuation Board] (Valuation of [land ] and Buildings) Rules 19843
West Bengal Valuation Board Registration of value - Surveyor) Rules, 19932
The West Bengal Valuation Board Amendment Act 2007
The West Bengal Valuation Board Amendment Act - 2009
Central Valuation Board Devaluing a Valuation Authority by Amaresh Bachi
West Bengal Valuation Board