Builders, flat owners flay administration's move
`If an apartment complex is assessed as one whole unit, the tax goes up by over 11 per cent'Collector says that his administration has not violated any rule in assessment of tax
KOCHI: The district administration, the builders and flat owners in Kochi are involved in a row about the criteria for assessing building tax.
The problem has cropped up with the district administration interpreting a building rule that has now made the builders responsible for remitting the tax in an apartment complex, said George E. George, secretary of Kerala Builders Forum.
The rule provides that if the builder is collecting funds from people and constructing an apartment on their behalf, the flat be assessed individually. But if the flats are constructed by builders and then sold to different individuals, tax needs to be assessed as one whole unit.
The Revenue Department's move to assess all the builders and flat owners by putting them into a single category is wrong, said Mr. George. And, this interpretation of the rule is prevalent only in Kochi, he said.
As there are slabs for tax assessment, if an apartment complex is assessed as one whole unit, the tax goes up by over 11 per cent, said Sani Francis, vice president of Kerala Builders Association. The slab existing in the Corporation area is nil for a housing unit up to 100 sq. m, Rs.2,025 for a unit from 101 sq. m to 150 sq. m. area, Rs.4,050 for units from 151 sq.m. to 200 sq.m., Rs.8,100 for units from 201 sq.m to 250 sq. m. and for above 250 sq.m area there will be a charge of Rs.1,500 for every additional 10 sq. m. Over and above, there is a 15 per cent levy of surcharge too.
In an apartment complex, there would units, which are less than 100 sq. metre area and also more. But, when the tax is levied on the whole complex, the cumulative effective makes even those who are out of the tax net to pay up a huge amount, said L. Vancheeswaran, tax consultant for KBF. As the builders usually register the flats in the owner's name as the undivided share of land, the responsibility of the builder remitting the tax does not arise, said another builder.
For example, if there are 80 apartments in a complex with 40 numbers of 1,000 sq ft units and 40 numbers of 1,500 sq. ft, the total of the individual tax from each unit would be Rs.81,000 as only 40 flat owners would come under the tax net, as units of 1,000sq. ft (or 92.94 sq. m) do not have to pay tax.
But, going by the interpretation of the rule in which tax is being assessed by the district administration for the whole apartment complex as one unit, it would come up to over Rs.14.70 lakh, which when divided among the 80 owners would be over Rs.18,300.
In such a situation, even those who own only 1,000 sq. ft unit end up paying more tax, when actually the law exempts them, said Mr. George. In comparison an individual house owner living in a 3,000 sq. ft. house would have to pay only Rs.8,100 as tax compared to about Rs.18,000 payable by a person owning a 1,000-sq.ft. flat.
The strange situation has perhaps come up as some of the resident associations found themselves in dire straits when the district authority slapped them with a huge tax amount. These associations argued that they had paid the tax amount to the builder at the time of paying the money towards construction. However, this amount was not remitted to the Government.
In one case, the secretary of the Association said that the builders have collected the building tax along with the price of the apartments four years back. The association has since informed the authorities about this fact and asked them to collect the tax from the builders.
District Collector A.P.M. Mohammed Hanish says that his administration has not violated any rule in assessment of tax.
In spite of the protest from builders, well established builders have remitted the tax into the Government kitty, he said. No tax has been paid by many assesses for a period between 1987 and 2000, he said. The drive to collect tax has resulted in a positive response, he added.
The Government is at a huge loss if a single apartment complex is assessed individually, he said. However, if the court of law states that individual unit owners in an apartment complex need to be assessed separately, the administration is ready to abide by it, Mr. Hanish said.