Property Tax: Nagpur Municipal Corporation proposes 4% hike, unlikely due to Elections

NMC mulls over 4% Property Tax Hike, Impending elections being a roadblock
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The property tax department of the Nagpur Municipal Corporation has put forward a proposal to revise the general tax across all five slabs by 4%. Additionally, it suggests increasing five other taxes from the current 1% to 2%.

A source within the NMC mentioned that if approved by municipal commissioner and administrator Abhijeet Chaudhari, these changes will take effect in the next financial year. Property tax serves as the primary revenue source for the civic body, but despite the proposal, the likelihood of implementation appears slim due to upcoming major polls—Lok Sabha, state assembly, and municipal corporation—in the next few months.

The NMC administrator is expected to announce the revised tax in the budget to be presented by the end of this month. Notably, the last revision of property tax by NMC occurred in 2015. Although the proposed hike is in place, the current political climate may impact its execution.

The property tax rate imposed by Nagpur Municipal Corporation is comparatively lower than that of other municipal corporations in cities like Pimpri Chinchwad, Nashik, and Amravati. Despite the absence of a general body, the department has submitted the proposal to administrator Chaudhari, citing the provisions of the Maharashtra Municipal Corporation Act, which allows NMC to revise property tax annually.

The 2023-24 budget allocates a target of ₹300 crore for the property tax department within the ₹3,336 crore overall budget. However, with only a month remaining, achieving this target seems challenging, as the department has recovered over ₹224 crore thus far. While property tax contributes only 7% to 8% of NMC’s revenue, it remains the sole revenue source for the civic body.

The lack of revisions in civic taxes has led to increased dependency on government funds. Despite the continuous increase in water tariffs by Orange City Water Limited, which manages the city’s water supply, the poor collection of taxes has resulted in outstanding tax reaching ₹900 crore.

The NMC administrator had previously announced an amnesty scheme for tax defaulters, and efforts were intensified to address outstanding property taxes. In light of the current situation, the NMC’s reliance on government funds has risen significantly.

The NMC’s property tax system includes various taxes such as general tax, sewerage tax, sewerage benefit tax, water tax, fire tax, tree cess, education tax, and others. The department proposes revising the general tax rates for different property tax brackets, ranging from 14% to 30%. Additionally, it recommends a 100% revision in fire tax, water tax, tree cess, streetlight, and education cess, raising them from 1% to 2%. Despite previous attempts to revise general tax rates in 2022 and 2023, these proposals were either rejected or left unchanged.

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