In the wake of the Madras High Court directing the State government to revise property tax rates in the city, the Chennai Corporation will soon announce rates based on the guideline value of properties.
With the Corporation’s outstandings at a whopping ₹2,498 crore, the State government is expected to permit the civic body to increase its property tax collection to ₹1,200 crore a year, sources said.
Currently, the Chennai Corporation collects ₹750 crore as property tax a year. The potential for property tax collection is ₹2,000 crore annually, the sources added.
While a hike in property tax is definitely on, the State government will not permit the civic body to increase rates beyond 100% for commercial buildings and 50% for residential buildings, the sources said.
For prespective, it must be borne in mind that the guideline value has increased by over 450% in most parts of the city in the past 20 years, even as the civic body has kept property tax rates constant in the same period.
A final decision on revision of property tax rates is expected to be taken by the State government on Monday, officials said.
To aid repayment
According to a study, the revision of property tax rates on the basis of current guideline value is expected to facilitate repayment of the Corporation’s loans in three to five years. In the absence of any hike it is projected that repayment will happen only 2031-2032.
The Corporation has taken a loan of ₹689 crore from the State Bank of India for implementing various schemes including roads, ₹720 crore from TNUDF for stormwater drains, ₹376 from TUFIDCO for building bridges and laying 10,000 roads and ₹201 crore from the State government for JNNURM projects. The civic body has also availed of an overdraft of ₹450 crore from banks.
Squeezed for funds, the Corporation has not been able to settle bills amounting to ₹172 crore. Expenses on payment of salaries and pension have also crossed ₹110 crore a month.
According to data compiled by the Corporation, 20% of the 12 lakh property tax assessees pay on time; that is, within the stipulated period of 14 days from the commencement of every half year in April and October. As per existing provisions of the CCMC Act, all property tax assessees have to pay property tax before April 15 and October 15.