The Chennai Corporation Council on Monday passed a resolution to increase the property tax for buildings housing IT companies. The increase in the tax rates range from 50 to 200 per cent. The civic body has identified 344 IT companies in ten zones in the western and southern parts of the city. The zones of Tiruvottiyur, Manali, Madhavaram, Tondiarpet and Thiru.Vi.Ka. Nagar do not have any IT companies.
The Corporation has identified 3.3 crore sq ft of property used for housing IT companies in the 10 zones. The total property tax collected from the owners of such buildings is Rs.10.84 crore. The existing average property tax rate for one sq ft for such buildings is Rs. 3.29. The proposed property tax rates for the newly created category of IT buildings approved by the Chennai Corporation council ranges from Rs.4 to Rs.27. Teynampet zone will have a 200 per cent increase from the Rs. 3 - Rs. 9 range to Rs. 9 - Rs. 27 range for IT buildings. Sholinganallur zone will have a 100 percent increase from Rs. 2 - Rs. 4 to Rs. 4 - Rs. 8 for such buildings.
Chennai Corporation had initiated a study on IT buildings a year ago to improve property tax collection in the city. Mayor Saidai S. Duraisamy pointed out that the tax rate for IT buildings was on a par with that of small retail shops. “The owners of the buildings reap the benefits of rise in rental value of such buildings. But, the tax rate for such buildings was not changed. The tax rate is based on the rental value of the building,” said Mr. Duraisamy.
“This is not a move against IT firms. The Corporation is trying to collect the right amount of property tax from building owners,” he said.
The decision of the Corporation will lead to IT buildings becoming a new category similar to hospitals, star hotels, lodging houses, cinema theatres and marriage halls.
The existing tax rates for such property in the 15 zones range from Rs.1.20 to Rs.11.25.
