‘Som Prakash formula’ not JNNURM compliant

The formula to calculate property tax in Punjab,suggested by a committee headed by chief parliamentary secretary Som Prakash does not comply with the conditions laid down by the government of India under the JNNURM.

Written by Chitleen K Sethi | Chandigarh | Updated: April 16, 2014 2:59 pm

The formula to calculate property tax in Punjab,suggested by a committee headed by chief parliamentary secretary Som Prakash does not comply with the conditions laid down by the government of India under the JNNURM.

The watered down formula arrived at by the committee and BJP representatives here late Thursday was vociferously objected to by officers of local bodies department during the cabinet meeting on Friday. They said it will belie the very purpose for which property tax was being implemented in the state

While no final decision was taken on the matter in the cabinet,the Punjab Congress,pre-empting its acceptance,issued a ‘congratulatory’ note to the public.

Earlier,the Som Prakash committee met representatives of the BJP and suggested a new formula to replace the original model of collection of property tax mooted in November 2012. The formula is simple and populist,but if implemented,it will lead to the state losing out on the JNNURM funds for non compliance of its conditions.

While the original model calculated property tax on unit based area,the ‘Som Prakash formula’ is based on standard unit of calculation. The committee had proposed that on residential properties measuring more than 150 yards,property tax should be levied at 25 paise per square feet on covered area and Re 1 per yard on uncovered area. This unit of calculation of the property tax is already being followed in the state for commercial and built up properties. This formula is unacceptable to the JNNURM for the purpose of urban reforms.

The original model lays down that each property tax payee will calculate the “rateable value” of his property depending on its size,the zone it falls in,age of construction,value of land and covered space. Once the annual rateable value (ARV) of the space and the building is arrived at,it would be taxed. This is the model followed in many other states in the country and is JNNURM compatible.

Also the committee suggested to the government that there should be no property tax on residential properties measuring up to 150 yards. This brings down the coverage of the property tax to 65 per cent while the JNNURM conditions specifically states that the property tax should have a coverage of at least 80 per cent.

The committee had added that there should be uniform rates across the state while the property tax formula which was finalised originally had divided each municipal area into zones depending on the amount of development that has taken place. A property in a highly developed area will be taxed more than the one in a lesser developed area.

In case it is replaced,the existing formula,implemented in November last,would have to be revoked through an ordinance as the Punjab Assembly had already cleared it.

Deputy chief minister Sukhbir Singh Badal had constituted the four member “informal” committee under Som Prakash on April 1 to suggest an alternative method to collect property tax in the state.

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