Reforms likely to jack up property tax in Hyderabad

Telangana residents are likely to face property tax hike post the elections. New calculation mechanism will be based on market value, resulting in higher tax burden.

Given the indications, the heft of property tax on the city residents is poised to increase by leaps after the elections to the Telangana Legislative Assembly.

The increase would be part of the financial reforms in urban local bodies, being pushed by the Central government across various cities, in order to make them self-sufficient in terms of revenue generation.

In Telangana, the property tax reforms for residential properties have already been implemented in several municipalities and corporations outside the Greater Hyderabad Municipal Corporation. The newly constituted municipal corporations on the peripheries of the city have introduced new rates, which, in fact, appear higher than those within the city.

“We are paying more than the property owners in the city; yet, the facilities provided are pathetic. Sore over this, many property owners here have stopped paying the tax,” said Surender Reddy (name changed) an owner from the Nizampet Municipal Corporation.

What have changed are not the rates of property tax, but the calculation mechanism in the corporation. Instead of the Annual Rental Value (ARV), the new mechanism factors in the Market Capital Value of the property as the basis for the calculation.

According to the existing mechanism, ARV is calculated based on the size of the property in terms of square feet of built up area.

Earlier, the rates were highly discretionary and dependent on the assessment by the revenue staff such as bill collectors and tax inspectors. A large number of property owners, in probable collusion with the staff, escaped with as low as 10 to 30 paise of tax per square foot.