The State Government is all set to do away with the holding tax and introduce property tax in the areas under all municipal bodies from the next financial year.
The new form of taxation would be determined on the basis of development in these urban pockets. And under the new system, the income of urban local bodies is expected to rise.
In the initial stage, it would be launched in Municipal Corporations and later be implemented in other urban local bodies.
After the Odisha Municipal Corporation (Amendment) Bill, 2015 and the Odisha Municipal laws (Amendment) Bill, 2015 were passed in the State Assembly during the last Monsoon Session, the Urban Development Department is finalising the modalities to implement the new taxation system. This would be sent to the law Department by December for its approval, sources said.
Notably, there are five Municipal Corporations, 45 Municipalities and 61 Notified Area Councils (NACs) in the State where property owners pay holding tax.
Collection of holding tax, the prime source of income for municipal bodies, has not been very encouraging. As a consequence, there are often complaints of development work getting affected. Currently, two types of holding tax are in vogue: residential and commercial.
Under the provisions in the present proposal, each municipal body would be empowered to impose property tax in its area. However, the taxation rate would not be the same in all places. Each urban area would be divided into five units on the basis of development and geographical positioning. The five units are ‘more developed’, ‘developed’, ‘developing’, ‘backward’ and ‘rural’.
Services rendered by the municipal authority like roads, recreational facilities, bus stand, railway station, airport, commercial prospects, etc., in the concerned area would be taken into account while slotting an area in a particular category.
Notably, property tax is mandatory under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and the Urban Infrastructure Development Scheme for Small and Medium Towns (UIDSSMT) schemes of the Central Government.
Since the inclusion of the Bhubaneswar Municipal Corporation (BMC) and the Puri Municipality under the JNNURM in 2005, the Centre has sent repeated reminders for imposition of property tax in these cities.