Tamil Nadu government effects property tax revision after 24 yearsApril 18, 2022 . Real-Estate Industry . 10 min read
The Finance and Taxation Committee of the Coimbatore Corporation Council has recommended a hike in property tax, as well as vacant land taxes as was recommended by the State Government a few days ago. 83% of houses in the city will be affected by a property tax hike of 25-50 percent. This is due to the changed assessment values of homes following the reassessment this year.
The tax rates were revised based on the 15th Finance Commission’s recommendations to fix the minimum floor rate for property tax as made compulsory by the Union Government.
Change in the property tax
The Committee has recommended a 25% increase for houses that are up to 600 sq.ft., 50% more than what was before in regards to homes between 601-1,200 sq. ft. and 75% for those who have home areas between 1201 to 1800 sq. ft. and 100% for those more than 1800 sq. ft. along with an increase in the property tax for commercial buildings, with a 100% hike, and those belonging to industries or self-financing education institutions at 75%.
An increase in vacant land tax for each square foot has also been proposed. The rate will be increased from 100% to either 6% or average growth over the last five years, whichever is higher.
Impact of the property tax hike
With the increase in property prices, many homeowners are expected to see an increase in their taxes. The government has announced that 1.52 lakh houses will experience a 25% hike while 3.46 lakh and 3.12 lakh will experience an increase of 50% and 75% tax hike respectively. This means that of 77.87 lakh houses in the State, just 1.4% will experience a hike of 150% while of the remaining, 58.48% will see an increase of 25% and the rest 24.70% will see an increase of 50%.
The government has announced that property tax rates in Tamil Nadu will be increasing from the first quarter of 2022-23. Local bodies are expected to pass resolutions for this, and accordingly, people should start paying their new bills without delay. The property tax rates in Tamil Nadu seem to be lower than that compared the other parts of the country.
Property tax hikes in the past
The government increased tax rates by up to 300% in 1987. That year, it was hiked for own houses by 100% and rented ones by 200%. Commercial spaces were taxed at a rate of 300% whereas, during the next regime in 1993, it was again hiked by 50% for own houses, 100% for rented houses, and 150% for industries along with 200% for commercial spaces. In 1998, the property tax was hiked by 25%, 50%, 100%, and 150% respectively. The Chennai Corporation saw a general revision of property tax in 1998 while the added areas and surrounding municipalities saw a revision in 2008.
A notification from the state government said that while the growth parameters are on a rise, the property tax has remained the same. The expenditures for the civic body too had risen while the own source of revenues for local bodies was low, putting the municipal finances under strain. Thus the body had to take the decision of increasing the tax rates.
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