The much hyped Rent Control Act is, apparently, more a bane to property owners than boon, if implications of the Act were to be considered.

The Act would fill the coffers of local bodies with more than 3 lakh population and make a hole on the pockets of the building owners. The State Government in its Rent Control Act, proposed to provide safety net to the property (building) owner from the tenants.

The owner and tenant would have to enter into an agreement to ensure that the tenant would vacate the rented area as per agreement. And, the owner could collect the rent based on national price index. But, grey areas of the Act are: the building owner would have to cough up property tax (PT) in lakhs of rupees.

According to information available, the Act, recommends the rent be based on market value of the property. The PT would rise steeply as it would be calculated based on the rental value.

For instance, a building located in Suryaraopeta costs Rs.44 lakh (including land value). The Act recommends that the owner could collect 6 per cent of the commercial value as rental value, the rental value would be Rs.2.64 lakh.

Then, the owner would have to pay a PT of about Rs.58, 000 per annum as against existing Rs.4,800 per annum as the VMC collects 22 per cent of the Annual Rental Value.

In another instance, a house on a land of 50 sq. yards located in Ajitsingh Nagar would cost Rs.3.97 lakh, and the ARV would work out to Rs.23,000. The house owner, who is currently paying a PT of Rs.750 per annum, would be required to pay Rs.5,245 per annum, explains M.V. Anjaneyulu, secretary Tax Payers Association.

The worst part of the Act is that it allows tax to be changed every year. The PT is revised every five years now. As the ARV is calculated based on the commercial value or market value of the building, the ARV would also become dynamic.

Revision

The tax would be revised every year to match the rise in ARV, cautions Ch. Babu Rao, CPI(M) State Committee member.

There are about 1.20 lakh property tax assessments in the city, and the VMC collects a property tax of Rs.48 crore every year.

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