To                                                                        Date: 23.06.2021

The Commissioner,

Greater Visakhapatnam Municipal Corporation(GVMC)

Visakhapatnam.

Respected Madam,

Sub: Property tax- GVMC paper notification No: 1346 Dt: 03.06.2021-Objections.

GVMC proposed to introduce capital value for assessment of property tax in place of rental value at rate of 0.15% for residential, 0.30% for non-residential/commercial and 0.50% for vacant plots and 8% Library Cess on tax value. We totally oppose this proposal and submit the following objections.

Objections:

1. Introduction of property tax on capital value is against the interest of citizens. Market value increased 50 times to 200 times in last 30 years. eg: 30 years back market value in Madhuruwada was 200/- per sq. yard. Now it is Rs.30000/- per sq. yard. The market value increased 150 times in this case. 30 years back rental of a two bedroom flat was Rs.2000/- and now it is Rs.10000/- i.e. 5 times. The taxes were also increased 5 times in last 30 years. If capital value is followed the taxes would have gone up 50 to 200 times in these 30 years.

2. The market value decided by the registration department should not be taken as capital value for fixing property tax. Few bureaucrats decide market value without following any scientific method of calculation for the purpose of raising the revenue. The valuation fixed by the State is not having any legal sanction. Using it as the basis for revision of tax annually or perennially is not correct.

3. The suggested transitional period goes on for number of years. This is against natural law of justice. GVMC cannot keep transition period for unlimited number of years. Apart from this extended transition period, market values will also go up annually. Perpetual increase of taxes is not a good rule to follow.

4. The Registrar office follows a separate valuation for apartments and for individual houses. Different taxation for same size of building amounts to discrimination which is against the law.

5.  Automatic revision of property tax when the market values are revised is very detrimental to property owners. This will result in an annual and abnormal increase especially when the Government is increasing market values by 20% to 50% periodically (mostly annually, except in election years)

6. The resolution No.1976 was passed by bureaucrats. The elected council took charge in March 2021. This resolution was not approved by the elected counsel. Hence this resolution is not valid.

7. As per clause 6(6), the Council should consult the Property Tax Board before publication of the draft notification. The property tax board was neither formed nor studied the draft notification. Hence the notification is not valid.

8. As long as the property is used for residential/non-residential purposes either by the owner or the tenant, the property renders use value only. Only when the property is sold, it gives exchange value. Property tax is paid to Municipal Corporation by the Property owner when the property gives use value only. Hence levying tax on capital value is not a viable idea and against citizens interest.

9. It is every persons dream to own a house plot for construction of house in future. 0.50% tax on market value of the vacant land is too high. By imposing so much tax the Government is deterring people from buying property which is against human rights.

10. Levying penalty is uncalled for since the tax as per capital value itself will be very high. As it is majority of buildings have deviations from approved plan.  Levying penalty every year is against natural justice and may also encourage corrupt practices. Hence these clauses may be deleted

11. The state is already announcing that the “increase “ will be 0.15 % to 0.50% making it clear that a decision was already taken and the whole process being followed is just a formality. GVMC asked for objections on percentage of taxation only. Our objections for decrease of percentage doesn’t mean that we are accepting the capital value system. We hereby affirm that we are opposing the amendments made by AP Government to the Act.

12. The process adopted and methodology adopted are totally against the provisions of the Act.

13. The proposal by the Government and GVMC is very ill-timed. Years 2020 and 2021 were worst hit by COVID 19 and black fungus. Hospitalisation, deaths, lockdowns, loss of jobs, business closures, reduction in rents, and increase of prices effected people badly. The expected 3rd wave will further destroy the people. During this time, people are expecting help from the Government by reducing taxes. Considering the humanitarian ground the Government and GVMC should withdraw this proposal and give some concessions on property tax. Few States have already given various concessions on property tax.

14. This higher taxation and perpetual increase of taxes will force many people to sell   their properties. This affects the human rights. Charging 100% cost on sewerages and water charges and commercializing the basic facility also amounts to violation of human rights. Hence we request you to withdraw these.

15. Nowadays, due to the digital revolution and most reading and studying being done online.  Libraries are not used as much as in earlier years. Fixing 8% of tax for this purpose in meaningless and it should be reduced to a nominal tax of 1% at most.

Considering the above objections, we request GVMC to withdraw the property tax calculation method on capital value and continue the rental value system.

Thanking you,

Yours Truly

Andhra Pradesh Chambers of Commerce and Industry Federation