As municipal bodies face fund crunch, Centre & states come together to boost property tax collection

NEW DELHI: The Centre and states are joining hands to find a way out to increase property tax collection by municipal bodies, which stand at barely Rs 20,000 crore by nearly 1,000 urban local bodies.
A consultative panel under Union minister Hardeep Singh Puri has been set up with ministers from six states - Uttar Pradesh, Tamil Nadu, Gujarat, Punjab, Odisha and Tripura - to explore options to increase the property tax collection.
Sources said the panel would also consider the need for setting up of a dedicated cadre for tax collection and also to rope in women self-help groups in this exercise. Dwindling finances of municipalities is a major cause of concern and it is the main reason for the poor state of affairs in the urban areas as municipal bodies don’t have enough funds to carry out development works.
Currently, they largely depend on grants from state governments.
Sources said Puri told the panel members on Tuesday that urban local bodies (ULBs) bear a large percentage of their expenditure and currently they are not in a position to generate sufficient revenue for their expenditure even after the transfer of funds and other assistance from the Central and state governments.
He said the best practices adopted by states in five stages of property tax life cycle - enumeration, valuation, assessment, billing and collection and reporting - have been incorporated in a tool kit which has been prepared by the housing and urban affairs ministry. Puri has urged the states to adopt the best practices that suit their local conditions to increase property tax collection and also to encourage the municipal bodies to keep innovating.