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Tuesday, February 18, 2020

Explained: Started in 1971, Pune Municipal Corporation scheme that put it on back foot financially

PMC has been reconsidering its earlier policies that cut its revenue collection. Among them is the decision taken by the PMC in 1971 to enable 40 per cent concession in property tax.

Written by Ajay Jadhav | Pune | Updated: July 7, 2019 12:29:11 pm
Pune, Pune news, PMC, PMC Pune, Pune Municipal Corporation, PMC revenue, PMC tax collection, PMC property tax, indian express, latest news The Pune civic body had passed the resolution for the 40 per cent concession in property tax in 1971. (File)

Facing the financial crunch to manage its increased expenditure, the Pune Municipal Corporation (PMC) is trying to increase its revenue from all possible ways. It has been reconsidering its earlier policies that cut its revenue collection. Among them is the decision taken by the PMC in 1971 to enable 40 per cent concession in property tax.

40 per concession in property tax

The Pune city had witnessed flooding of Mutha river in 1961 due to the breach in Panshet dam, which led to around 1,000 deaths and left 65,000 people homeless. It had caused damage to many properties in and around the river. With residents struggling to undertake the repair work due to cost involved in it, the PMC passed a resolution in 1971 enabling concession of 40 per cent in property tax of residential properties that were ‘self occupied’ so that residents could use the money saved on the maintenance of their properties.

Objection by state audit department

The PMC had been implementing the scheme of 40 per cent concession in property tax since 1971. However, it was six years ago that the state government objected to it. The state audit department raised objections in implementing the decision, saying such tax concession decision could not be applied to only one municipal corporation in the state. It had urged the PMC to make the necessary corrections.

Attempts failed to withdraw scheme

The PMC administration has been trying hard for the last few years to get the resolution withdrawn, citing the objections raised by the state audit department as well as the shortage of funds for civic infrastructure. However, all its efforts have been shot down by the elected representatives in the civic body standing committee meetings. “The civic administration while seeking permission in the past to withdraw the resolution had categorically said that the decision taken 48 years ago should not be applied now. The properties affected by floods have been replaced by new buildings and so the scheme was of no use anymore,” said a civic official.

The civic administration again tried to propose the withdrawal of decision. “We had discussed the issue in the revenue committee meeting. It was decided that the resolution should be withdrawn and fresh proposal should be submitted in the standing committee,” the official said.

Maharashtra government’s move

The failure of PMC to pass a resolution to withdraw the 40 per cent concession scheme has made the state government take a call. “The state government has started the process of making the resolution null and void,” said a civic official, adding that the resolution would seize to exist and the PMC will have to charge complete property tax.

PMC’s struggle to manage finances

The PMC has not been able to implement its entire budget for the past few years due to shortage of funds. The expenditure of the civic body has been on a rise due to increasing number of infrastructure projects in the city to meet the demands of increasing population. The civic administration’s efforts to increase the taxes were constantly rejected by the elected representatives, thus adding pressure on the PMC in implementation of its annual budget despite raising funds from national and international financial agencies. The municipal commissioner has directed various department heads to take up new projects only after assuring availability of funds and land for the same.

Property tax main revenue source

For long, the PMC was dependent more on the octroi collection, which was the largest contributor to its revenue collection, until it was abolished few years ago and replaced by the Local Body Tax (LBT). The LBT, too, was removed after the Goods and Service Tax (GST) came into implementation. The PMC depends on the compensation grant from the Union government, but there is no guarantee for how long it will continue. The property tax is the only direct revenue source for the civic body. The PMC is trying to strengthen its revenue collection by checking thefts and ensuring 100 per cent collection while revising its earlier tax discount schemes. Besides the 40 per cent concession, the PMC had also offered tax concession of 15 per cent for the maintenance of property and discounts for implementation of eco-friendly facilities, like using solar energy, vermicomposting and rainwater harvesting in properties.

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