Move follows drop in targeted recovery in state for 2019-2020Govt may hire private firms to collect property tax in 13 MCs

Rajmeet Singh

Tribune News Service

Chandigarh, December 20

The Local Government Department is contemplating to privatise the collection of property tax in 13 municipal corporations (MC) in the state.

The move follows only 63 per centcollection of the targeted property tax recovery and that too from 38 per cent of the total taxable properties in the state for the fiscal year 2019-2020, with an abysmally low 40 per cent recoveryfrom residential properties compared to 70 per cent recovery from commercial and industrial properties.

With 45.7 per cent recovery rate, Amritsar stands at the lowest ebb followed by Patiala with 57.74 per cent recovery rate. Incidentally, Patiala MC also has areas represented by Chief Minister Capt Amarinder Singh and Local Government Minister Brahm Mohindra.

The issue to boost tax collection figured in a recent meeting on tax reforms and experience of private agencies in improving recovery rate. To finalise its strategy to enhance the recovery of property tax in the urban local bodies, the department had also invited an Expression of Interest (EOI). At least eight companies participated in a presentation-cum-meeting chaired by the minister last month.

A senior government functionary said the privatisation of the tax collection was one of the proposals, the other being deputing regular staff to improve the recovery. The final decision is pending with the government.

The department has also proposed to bring rationalisation in the evaluation of the properties. In case of residential properties, it has been proposed to do away with self-assessment system or make it optional and come up with fixed monthly tax.

For self-occupied commercial property, it has been proposed to be charged based on collector rates and in case of rented commercial units, it has been proposed to charge on the basis of 7.5 per cent of the annual rental value subject to the condition that it cannot be less that the tax collected on the basis of collector rate for the self-occupied properties.