aasthi - cips · 2016-07-14 · section 102 of karnataka municipalities act 1964 & section 109...

AASTHI(GIS BASED PROPERTY TAX SYSTEM)

Directorate of Municipal Administration

Dept of Urban Development

Govt. of Karnataka

Agenda

• Taxation Systems

• CVS method of Property Tax in Karnataka

• Municpal Reforms

• AASTHI (GIS BASED PROPERTY TAX

SYSTEM)

TAXATION SYSTEMS

Why Taxation?

• The main obligatory functions of the Urban Local Bodies are as follows.

– Drinking water supply.

– Street light facilities.

– Sanitation work.

– Providing Roads, Drains, Culverts etc

Why Taxation?

• There must be a source of income to provide the above amenities. .

– Constitution of India empowered State Government to levy Tax on Land and Building by providing an entry at item No. 49 in list II of seventh schedule there in

Characteristics of Good taxation System

• Transparent Assessment of Taxes

• No Discretionary power

• Low Tax to avoid the incentive to evade

• Ensure Equity between classes of tax payers

• High Penalties for tax evaders

Annual Rental Value

• Annual Rental Value is the rental value which a building is likely to fetch

– The annual ratable value was calculated on the annual gross rent. The rate of tax for each category of ULBs was as follows.

– Corporation 20% - 25%

– CMC – 20%

– TMC/TP – 15%

Annual Rental Value

• Rental Based valuation

– Plagued by rent control acts

– There was no formal course of training for these Assessors nor are any specific steps taken to ensure objectivity of the assessment.

– These Assessors were appointed to the ULBs once in Five years for revision of assessment.

– Discretionary powers to the Officials

CVS

• Other taxation Systems

– Capital Values System (CVS) : Market Value of the Property

– Unit Area Method (UAM)

• Basic Tax is based on Plinth/Carpet Area

Main Factors for CVS

• Location

• Usage (

Residential/Commercial/Industrial/Public)

• Occupancy (Self Occupied/ Tenanted)

• Construction Type ( Based on the type of

construction used for the Building)

• Depreciation Factor (How old is the building)

CVS METHOD OF PROPERTY TAX IN KARNATAKA

Property Tax Reforms

• Self Assessment based on Capital Value

System introduced on 2002-03 with the

following Intentions

• Comply with the Court Directives

• Increasing Own Tax Revenues

• Transparency in the Tax Calculation

Property Tax Reforms

Property tax is levied on building and vacant land situated within the municipal area.

The property tax is based on valuation of the property.

There are two methods of valuation of property.

For the purpose of purchase or compulsory acquisition of land the valuation is based on the actual market value of the property.

For the purpose of taxation the valuation is based on market value guidelines published under section 45B of the Stamp Act. (taxable capital value of property.)

Property Tax on Building

– The calculation of property tax may be made simple using the following formula: -

• Building Value = cost of erection of building x Plinth area of the building

• Depreciation of building = Depreciation quotient based on age of building x Building Value

• Capital value of land = Market value of land per square feet x Area of the land

• Taxable capital value of building = Capital value of land + Building Value –Depreciation of building

• Property tax = Rate of property tax x Taxable capital value of building

Rate of tax for Commercial Propertiessection 101 (2)(a) of Karnataka Municipalities Act 1964 and section

108 (2)(a) of Karnataka Municipal Corporation Act 1976.

Population Minimum Rate Maximum Rate

< 1 Lakh

Population

0.5% 0.9%

>1 Lakh

Population

0.5% 2%

Rate of tax for Residential PropertiesSection 101 2(b) of Karnataka Municipalities Act 1964 and section

108(2)(b) of Karnataka Municipal corporation Act 1976

Population Minimum Rate Maximum Rate

< 1 Lakh

Population

0.3% 0.6%

>1 Lakh

Population

0.3% 1%

Rate of tax for Vacant Lands

Population Minimum Rate Maximum Rate

< 10764 sq. Ft 0.1% 0.5%

>= 10764 and <

43056 sq. Ft

0.025% 0.1%

>= 43056 sq. Ft 0.01% 0.1%

Section 101 (2)(A)

Exemption from payment of Property Tax for vacant land situated within the

Municipal Area having population of less than one lakh.

Section 101 (2)(c)(d)(e) of Karnataka Municipalities Act 1964 & section 108

(2)(c) (d)(e) of Karnataka Municipal Corporation Act 1976

Method of Assessment and property TaxSection 102 of Karnataka Municipalities Act 1964 & section 109 of

Karnataka Municipal Corporation Act 1976

• The taxable capital value of such land shall be assessed having regard to the Market value guidelines and properties published under section 45B of Karnataka stamp Act 1957

• Fifty percent discount is allowed with effect from 1-4-2005, prior to that, at 100% of the Market value guide lines so fixed by the committee constituted under section 45B of Karnataka stamp Act 1957.

• This applies to vacant lands also which are liable for payment of tax

Depreciation at the time of assessment

• Depreciation is allowed to the buildings up to sixty years old, as per standard rate depreciation for buildings as prescribed by the PWD Department Government of Karnataka vide PWD hand book vol 11 pages 55 & 56 of the edition 1958.

Rebate for self occupied buildingSection 103 of Karnataka Municipalities Act 1964 & section 109A of

Karnataka Municipal Corporation Act 1976

• 50% rebate is allowed for the self occupied building by the kathedras/owner of the respective buildings.

Rebate of 5% on the amount payableSection 105 (1) para (2) of Karnataka Municipalities Act 1964 & section

112A para (2) of Karnataka Municipal Corporation Act 1976.

• The owner or occupier who is liable to pay Tax, files the respective returns together with the bank challen for having paid the Property Tax within a month from the date of commencement of each financial year (i.e. with is 30th April of each year), shall be allowed a rebate of five percent on the Tax payable by them

ENHANCE THE PROPERTY TAXSECTION 102A of Karnataka Municipalities Act 1964 & section 109A

of Karnataka Municipal Corporations Act 1976.

• The ULBs shall not be assessed each year thereafter but shall stand enhanced by 15% once in every three years commencing from the financial year 2005-06 but the ULBs may enhance property Tax up to 30% once in three years

• different rates of enhancement may be made to different areas and different class of buildings and lands.

• Provided further that the non assessment of property Tax under this section during the block period of three years, shall not be applicable to a building in respect of which, there is any addition alteration or variation to it.

Penalty

Penalty

• Levy of penalty at 2% Vide Section 105 (8) of Karnataka Municipalities Act 1964 & section 112A (5)(a) of Karnataka Municipal Corporation Act 1976:

• Levy of penalty of Rs 100/- : Section 105 (5) (c) of Karnataka Municipalities Act 1964 & section 112A (5)(c) of Karnataka Municipal Corporation Act 1976.

• Levy of penalty at two times. Vide section 105(b) of Karnataka Municipalities Act of 1964 & section 112A (5)(b)

of Karnataka Municipal Corporation Act 1976

Levy of penalty on unlawful buildings:-

• Section 107 of Karnataka Municipalities Act 1964 and Rule 22 of the Karnataka Municipalities Taxation Rules 2002 & section 112-C of Karnataka Municipal Corporations Act 1976 and Rule 12 of Karnataka Municipal Corporations Taxation amendment Rules 2002.

For any unlawful construction or reconstruction of any building or part a building.

Unlawful means.• Without obtaining permission under the provisions of KM

Act 1964.• Layout formed with out approval under the relevant law as

prescribed under Town and country planning Act. • Land in breach of any provisions of the KM Act 1964 or

any rule or bye law made there under or any direction or requisitions lawfully given or made under KM Act 1964 a rule ruler or bye-law.

Levy of penalty on unlawful buildings:-

• For these types and un law full, the concerned persons shall be liable to pay every year a penalty which shall be equal to twice the property tax levlable on such building,

• so long as it remains as unlawful constructions without prejudice any proceedings which may be instituted against the concerned in respect of such unlawful constructions,

• but such levy and collection of penalty shall not be construed as regularization of such unlawful construction or reconstruction.

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Challenges in Implementing CVS

• Completely vacant land’s are taxed

• Appurtenant land is taxed.

• Determination of capital value based on 45B.

• Based one time transaction

• Increases several fold within small span ofyears

• Not properly fixed.

• Tax will become very high

Overcoming the challenges• Completely vacant land needs to be taxed

• Tax on appurtenant land abolished

• Municipal council given powers to vary 45 B values up to certain limit for property taxation from 2005-06

• Tax Fixed for three years (an option to increase the tax by

15-30 % every 3 years).

• For 2002-03 to 2004-05, Property Tax restricted to 2 times of ARV property Tax (Reasonable as most ULBs had not revised property tax for more than 7 years)

MUNICIPAL REFORMS

Urban scenario in Karnataka

Categories of Urban Local Bodies in State

Total

213 ULBs

City Corporations

09

City Municipal Councils

(0.5 to 3.0 lakhs population)

42

Town Municipal Councils

(0.20 to 0.50 lakhs population)

94

Town Panchayaths

(0.1 to 0.2 lakhs population)

68

Good Governance

Competent and

Qualified Manpower

Sound Financial System

Efficient planning & Budgeting

Assets

Management

Optimum Resource

Mobilization

Coordination &

Good Team Work

Use of IT to improve efficiency / Monitoring of service delivery

Good Governance Contd.........

• Transparent Citizen Interface• Timely redressal of Citizen Grievances

Citizens

Participation

Respect for Human RightReducing direct Citizen

Officer interface

Background

• The Urban Development Department, GoK through the Directorate ofMunicipal Administration launched Municipal Reforms along withComputerization of all Urban Local Bodies in the year 2004

• With Financial assistance from the Asian Development Bank (for NNP)and World Bank (for KMRP)

• To upgrade all ULBs from the existing manual system to Computerbased systems, thus streamlining ULB’s Municipal functions throughprocess re-engineering and use of IT tools and Technologies

• Towards smoother delivery of municipal services to the citizens ofKarnataka

Municipal Reforms Cell

MUNICIPAL REFORMS CELL

Municipal Reforms Cell

Municipal Reforms Cell

• Exclusive cell under DMA

• Co-ordination with projectpartners

• Rolling out of Application

Municipal Reforms Cell

• Operations and Maintenance of Centralized

Database

• Managed by Professionals hired from the market

directly

• Hand holding and training of ULBs staff

Various Reforms Initiatives (through eGovernance tools)

• HR Reforms

• Accounting Reforms

• Reforms in Service Delivery

• Performance Monitoring

Municipal Reforms Cell

Reforms in Service Delivery

Phase-I (being implemented)

• GIS based property tax• Public grievances and redressal (PGR)• Birth & Death Registration and Certification• ULB websites

Phase-II (to be taken up)

• e-procurement• Building plan approval• Trade license• Ward works• Water tariff

Municipal Reforms Cell

AASTHI(GIS BASED PROPERTY TAX SYSTEM)

Municipal Reforms Cell

Why reforms in property tax….?Issues faced by the department

• Low rate of filing the property tax returns

• High accumulation of arrears

• Negligible penalty for not filing the return.

• Improper assessment of Property tax by ULB Officials which was causing huge Revenue loss to the ULB

• Large number of properties were unassesed and not brought under Tax net

• Delay in preparing the list of defaulters

• Delay in preparing notices to defaulters

• Problems in identification of unassessed properties.

• Poor rate of Tax collection & inaction on mounting arrears

• No uniform procedure of taxation

• Lack of procedural compliance to the act, Taxation principles followed by some ULBs were not in accordance with Act

• Tampering of records

• Inaccurate and inconsistent details and data provided by ULB

• Geographically widespread casing problem in monitoring of ULB Tax performance

• Property records were maintained in manual DCB registers

• Registers had details of only assessed properties. Out of which, many properties were wrongly assessed

Need for reforms in property tax…. Issues from the perspective of citizens/service users

• Delay in issuing property tax extract to citizens

• Non service of hand written property tax notices to the Property owners by Bill Collector every year

• Possibilities of tampering the property details entered manually in paper form

• Calculation & clerical Errors in Taxation by Bill Collectors & Revenue Officers.

Issues faced by the government

• Discrepancies in reported figures from ULBs

• Lack of timely information about property details from ULBs

• Inaccurate projections of Property Tax demand which was one of the main source of revenue of ULBs

• Monitoring Collection efficiency across 213 ULBs difficult

• Tampering of Manual records, misplacement of records• Manual Data was Inaccurate

Municipal Reforms Cell

Steps involved are….

– Street Naming

– Street Numbering

– Property Numbering

– Preparation of City Maps

– Preparation of Area (ward) Maps

– Identification of each property outlines on property level Area (ward) maps

– Data entry of Form ‘C’- MIS

– Digitization of Area (ward) maps - GIS

– Property details linking with digitized map

– Collection of Data [Form - C]

Municipal Reforms Cell

SURVEY OF

PROPERTIES

SUPERVISION OF

SURVEY WORK

SOURCE For Extracting GIS Layers

Image From Google or

Wikimapia

SOI – TOPOSHEET

1:50000 scale

ULB Base Map

Sample Maps

Base Map

ULB Base Map

Digital ULB Base Map

Digitised Base Map – Closer Look

Sample Maps

Base Map

Digitised Base Map – Superimposed over Satellite Image

Sample Maps

Block Map Over Image

Sample Maps

Property Field Survey MapProperty Field Survey Map – Zoom

Digitised Property Blocks

Municipal Reforms Cell

at ULB

Data in Municipal Books/SAS

Validate and Augment the Data with DCB (CY

+ last 5 years)

Amalgamate Data

Field Survey

Capture MIS Attributes

ULB Base map preparation which includes City Boundary, Ward Boundary, Block Boundary and

Street Network

Hiring and Training locally hired Survey Assistants and ULB Engineers on Street naming

and Property Numbering

Create a Unique ID for Each Property

Draw Property Polygons with PID on Ward/Block Maps

SOIData Entry by Locally Hired Data Entry Operators

Data Validation by Revenue Staff

MRC

at SOI

Digitization of Maps submitted by ULB

Validation of Street naming, Numbering and Property

Numbering

MRC

at MRC

Verification and Validation of Data

Notice to Citizens

Data on Production

ULB SOI

MIS Data

GISData

Integrate GIS and MIS database

Verification and Validation of Data

Continuous Data Updating

After initiative - Present scenario

• Sound Database of all properties available with the ULB

• Information about collection of property tax at any point of

time

• Tracking of defaulters

• Helps in infrastructure planning

• Quick information about various types of properties in ULB

Municipal Reforms Cell

• Identified unassessed properties

No of ULBs

No of properties as per

MAR 19

No of unassessed

properties identified% increase in no of

properties brought under

tax net

213 ULBs 2600863 1207739 31.71%

Impact of the Project

PROPERTY TAX DEMAND

PRE & POST Aasthi IMPLEMENTATION

( Amount in lakhs )

Name of the ULB

Before After

Amount of Increase in demand % IncreaseDemand Demand

Gokak 79.36 107.68 28.32 35.68

Nippani 64.26 79.6 15.34 23.87

Channapattana 55 70 15.00 27.27

Hassan 637.58 909.11 271.53 40.31

Aasthi GIS Based PTIS Application

• Assessment of property & property record creation

• Minimizing the chances of property record tampering

• Property tax payment by Citizen

• Real time data on collection of property tax by the ULB

• Easy search & analysis of property & tax related data

• Tracking of default on property tax payment

• Over the counter issuing of Khatha Extract

• Automatic calculation of Property tax demand

• Online property tax calculator for the citizen

• Policy/System uniformity across 213 ULBs

• Cost saving associated with property tax collection

Processes Simplified (Services Covered)

Application access Flow

Administrator Login

Application access Flow

GIS ….Phase II – Features of Aasthi Implemented Computing automatic property tax demand

-Property tax Demand Calculation from 2005-06

-DCB report from the year 2005-06

-DCB Report at Different ULB Boundary levels

-Demand Adjustment due to Property Modifications

-Demand Adjustments due to any Write offs

-Auto Rebate and Cess calculation if any.

-Penalties are auto calculated.

Automatic generation of demand notices and seizure notices

-CAL notices are generated on 1st July every year for Tax default Properties.

-Demand Notice is generated if tax is not paid within 30 days from the

time of CAL notice served

-Seizure notice is generated if tax is not paid within 30 days from the

time of Demand notice served

Online Property Tax Calculator

-Helps Citizen to calculate their Property Tax

-Citizen has to furnish their property Location and Property Details

-System will calculate the Property tax and shows the detail Property tax

calculation.

ULB Level DCB

Thank you