To mop up additional revenue of about Rs 1000 crores, Punjab Cabinet decided various measures on August 28 including imposition of Property Tax which interestingly would not only be on the built up houses but vacant plots and semi-built up units have also been brought under the purview of the proposed tax.
Highly placed sources told that all vacant plots would attract 25 per cent of Property Tax calculated at one per cent of total Annual Value of the property. This would be arrived at the annual unit value multiplied by size of the plot. Similarly the partially built properties which have been built up on less than 25 per cent of plot area would be taxed at one per cent of annual property value of the built up area plus 25 per cent of Property Tax. This will be calculated on the basis of total annual value of the unit multiplied by the size of the unit that is built up area of vacant plot.
Properties built up on area of more than 25 per cent of plot size would fall in the category of fully built up properties and would attract one per cent of total annual unit value multiplied by the size of built up area.
The proposal cleared by Cabinet says that all property owners who deposit Property Tax by June 30 of each year would get 10 per cent early payment rebate. There is heavy penalty on those who default on Property Tax by due date and all such defaulters would be fined at the rate of 25 per cent of Tax payable and 15 per cent annual interest for the delayed period.
The Property Tax would be calculated keeping in view various parameters viz usage factor, type factor, structural factor, occupancy factor and age factor. It would be 1.0 per cent in case of residential properties. While independent houses attract 1.0 per cent Property Tax, flat owners have been given a little relief as they would pay 0.75 per cent tax. The tax would be 1.0 per cent if the property if self-occupied and 2.0 per cent if rented out. All properties constructed during the past 10 years would get 1.0 per cent tax, between 10 to 20 year old properties 0.9 per cent, 20 to 30 year old properties 0.8 per cent, 30 to 40 year old properties 0.7 per cent, 40 to 50 year old construction 0.6 per cent and above 50 years 0.5 per cent.
It would be 1.5 per cent in case of institutional properties including government educational institutions and various government offices. Industrial properties, private hospitals, nursing homes and private educational institutions would get 2.0 per cent tax. All hotels up to two star ranking and commercial properties would be imposed 4.0 per cent tax. Shopping Malls and three and four star hotel properties would attract 5 per cent Property Tax. The highest Property Tax has been kept for five star hotels which would have to pay the Property Tax at the rate of 10 per cent.
On the basis of the property value assessed by the deputy commissioner, Property Tax would be calculated at 5.0 per cent of total unit value in case of domestic properties, 20 per cent of total unit value in case of Malls and five star hotels and 15 per cent of total unit value in case of rest of properties. Property Tax would be 1.0 per cent of annual unit value.
The formula for unit value would be arrived on the basis of prevalent market rate of the property, value of construction and rental value of the property.