CAG raps Kerala government for failure to collect property tax

CAG criticises Kerala government for failing to collect property tax, flags fraud in Kudumbashree Mission projects.

The Comptroller and Auditor General of India (CAG) has pulled up the Kerala government for failing to collect property tax from many unaided educational institutions, buildings owned by the Central and State governments, commercial buildings and BSNL. Its audit report on local self-government institutions for the year that ended March 2022 also flagged the failure of urban local bodies in levying service cess, resulting in a loss of potential revenue of ₹84.40 crore.

A performance audit revealed shortcoming in assessment, levy, collection and accounting of property tax that is a major source of revenue of Corporations and Municipalities, constituting about 48.28% of their own revenue.

The report, tabled in the Kerala Legislative Assembly on July 11, observed that the Municipal Act/Rules lacked clear provisions mandating regular enumeration of properties, resulting in urban local bodies not possessing a list of entire buildings that could be assessed to property tax. The undue delay in completing digitisation of the database denied the civic bodies the opportunity to reap full benefits of technological advancements. Serviced apartments were treated as residential buildings, resulting in short collection of tax. Property tax was also not collected from self-financing colleges.

The CAG also faulted the Kudumbashree Mission for failing to prevent multiple suspected frauds committed by the project implementing agencies (PIAs) in the Central scheme, Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY), aimed at imparting skills to the rural youth.

As part of its central role in implementing the scheme in Kerala, Kudumbashree was tasked with selecting PIAs. During 2014-2022, reported to have trained and placed 61,459 and 35,741 candidates respectively.

The audit found that 32% of the placement claimed by Kudumbasree was “false and fabricated”. The PIAs were found to have manipulated the “weakness” in the system, resulting in the extension of undue financial benefits to private players.

Various instances of fraud such as forged bank statements, round tripping of money, presenting own staff as trainee candidates etc. revealed the ineffectiveness of internal controls in Kudumbashree. The PIAs involved in fraudulent practices were found to have been awarded projects worth ₹28.23 crore.