The increase in the property tax rates, ranging from 25% to 50%, will affect about 83% of the houses in Tamil Nadu.
Of a total of 77.87 lakh houses in the State, the 25% increase will cover approximately 45.54 lakh houses and 50% will cover 19.23 lakh houses. Giving the details, a senior government official says only around 7% of the houses come under the slabs of 100% and 150%.
The official clarifies that in respect of town panchayats and municipalities, the government has issued directions for the increase, whereas in the case of 21 municipal corporations, it has advised the local bodies with regard to the increase. The councils of the corporations are expected to adopt resolutions on the tax revision; thereafter, the increase will come into force.
The revision in the rates for the core parts of the Greater Chennai Corporation (GCC) or the limits of the GCC, as existent prior to the merger of 42 local bodies in 2011, is sought to be made after a gap of 24 years. In respect of the remaining parts of the State, which include the extended areas that are part of the GCC since 2011, the revision has come after 2008.
Emphasising that the State’s policy favours the implementation of a “progressive and equitable” tax structure, the official explains that in the case of the GCC, in areas coming under the Adyar zone (no. 13), the present median value of the annual property tax for a 600-square-foot house is ₹308 and it will go up to ₹462. In the same zone, the respective figures for houses of 1,201 square feet to 1,800 square feet are ₹1,461 and ₹2,922. For houses falling under the Thiruvottiyur zone (no. 1) in the northern part of the city, the current median rates for a 600-square-foot house and houses of 1,201 square feet to 1,800 square feet are ₹211 and ₹736. They will go up to ₹264 and ₹1,288.
Contending that the dosage of hike is “mild”, the official points out that annually, the urban local bodies will earn about ₹1,750 crore more than what they got in the past. The latest measure will fetch around ₹800 crore additionally to the GCC.
The measure has been taken after a number of factors — such as the wholesale price index (WPI), economic growth, expenditure of urban local bodies and the guideline value of land — were considered.
Another official explains that inflation, as an indicator of WPI, has gone up 2.9 times since 1998 and 1.79 times since 2008. Tamil Nadu has not kept pace with other States such as Karnataka, Madhya Pradesh, Andhra Pradesh and Telangana where the property tax has been linked to the guideline value. In Telangana and Karnataka, a minimum of 5% revision takes place every year.
As for the guideline value, the official observes that the core parts of Chennai saw a rise, ranging from 146% to 349%, in the last 24 years and the added areas, 55% to 156%, in the last 12 years. Likewise, the own source revenue of the local bodies, as a proportion of the total income, has gone down over the years. For example, in respect of the GCC, it was 60% in 2010-11 and went down to 43% in 2020-21, the official adds.
