HYDERABAD: The State Government is mulling different options for levying property tax on buildings in municipalities and municipal corporations across the state. Currently, property tax is levied based on the Annual Rental Value (ARV) in all urban local bodies (ULBs) in the State.
Apart from ARV, now the government is planning to use methods such as the capital value either from this financial year or the next.
In cities such as Bangalore, property tax is collected on the basis of capital value, which is fixed by the respective revenue department. If the State government decides to go ahead with this system, property tax rates are likely to go up.
As per the self assessment scheme currently in place in the State’s ULBs, the property tax is calculated through the ARV method. It is based on standard rents filed by the Rent Control Act. Currently, the ULBs collect around 30 per cent as property tax based on annual rental value, which includes 15 per cent as general tax, nine per cent as conservancy tax, three per cent each for street lighting and storm water drains.
Under a capital value system, the calculation of tax would be based on the value of the land as well as that of the building. It takes into account the capital value of the building, which is in turn based on the cost of the land as well as the cost of the building after accounting for depreciation. The building cost is taken as per the scheduled rate as prescribed by the State government. For determining the value of land, the system uses rates notified by the Stamps and Registration Department
The government will constitute a Property Tax Board to provide assistance and technical guidance to all ULBs in the State for proper assessment of property tax in their jurisdictions.