Property tax as such has assumed increased significance in giving fiscal self- reliance to ULBs. It has all potential to improve the financial health of ULBs and make these responsive to the delivery of services to the urbanites.

In the present format it will act as the biggest single source of local government finances and increase revenue receipts much needed to maintain, upgrade and provide essential services.

As such the significance of the property tax can hardly be undermined. It is really a step in right direction and has in it, inherent facets of fulfillment of prerequisites for tapping and accessing the funds which otherwise ULBs are unable to access, lift and utilize.

As estimated by the HUDD Department property tax in the JKUT would generate an income of Rs. 115 crores yearly which will substantiate to the requirements of estimated urban expenditure of Rs. 850 crores. HUDD Department has also clarified that levying of property tax is practice not only in India but across the world.

Need for rationalisation of residential property tax regime

In contemplation of the tax regime due consideration to the geographical disparities, urban legislation enforced till date, existing ground realities, policies under master plan, guidelines for smart city mission and many other vital aspects of the cities and towns of the J&K seem to have been ignored.

Urban policy makers and planners of the JKUT seem to have relied more on reducing the slab values in the regime with exception of exemption for attic in built area and imposed it without pursuing any improvement, efficiency and coverage in any form to revitalize judiciously property tax regime meeting requirements of changing urban dynamics and urban economics. Existing regime has a number of inherent gray areas which if left unaddressed would have far reaching impact on the future of our cities and towns, swaying cross section of the urbanites in numerous ways;

1. Exemption up to 1000 square feet built up area may well be accepted and acknowledged in urban areas where there is a preponderance of apartment/flatted development.

The urban landscape of J&K is dominated by individual houses with one or more than one stories, with low land holdings and built up area, with multiple floors and families living in older parts of the towns and cities.

Therefore, inherent drawback in exemption is that people living in houses up to 1000 Sq ft built up area flats and individual houses with sound economic base would get the benefit under the existing regime while as people living in older parts of towns and cities, despite having lesser living space on ground and subsequent floors,(e.g. 400 sq. feet area on ground floor with three or more floors occupied by urban poor have to pay tax despite poverty) with almost no land appurtenant, occupied by multiple families would come under the purview property tax. As an urban policy decision it can have far reaching socio –economic implications in the long run like depopulation from core, growing number of destitute due to forced and untimely transfer of property right through family sub division, heavy environmental improvement cost. It is bound to make our towns and cities more sprawled through induced suburbanization. There is a need to rationalize tax regime not only to save the local bodies from cloaked impact but also to safe guard urban poor living in older parts from unmerited tax.

2. Tax regime also spells out exemption of land appurtenant to built up areas up to two times the area covered on ground of the structure. This factor needs reassessment and rationalisation with the view that over the years ULBs have enforced development controls /building bye laws compelling and constraining people in cities and town to expense their prized land in the form of set back without any viable utility and use. These areas are acting as shadow /gray area in the premises, there inclusion in appurtenant seem unjustified. Setbacks enforced as per the development regulation have constrained the individual houses to leave a sizeable costly land. Rationalisation to the extent of 75% land under set backs (three side set back) need to be ensured through exemption in calculation of land appurtenant to each building for property tax. Unlike JKUT, other parts of the country has had building controls much flexible since long allowing maximum utilization of land for productive purpose to the urbanites of these urban area providing relative advantage to them than their counterpart in JKUT. Outside JKUT land utilization in low rise development is between 80-90% while as it is 30-50 % in JKUT, only due to enforced bye law .

3. It is important to note that urbanization in J&K has been characterized by spontaneity in its growth mainly due to failure of the authorities to augments and provide planned housing. These residential areas are completely deprived of open spaces and play areas with premise holding great significance for health of inmates of these areas. Implementation of exemption up to twice the covered area would prove a regressive measure and force subdivision of the holdings and increase the built up area at the cost of much needed open spaces. It will not augur well in the interest of curbing climate change and making cities and towns sustainable as enunciated in various plans and policy documents. The cap on the land appurtenant can have fall out by forcing people to move out to outskirts for luxury of liberal laws and would add more woes in the process to ULBs in immediate future. The cap on appurtenant needs rationalisation to reinvigorate the urban economic forces and discourage further decentralization of people and economic activities from these area to outskirts. It is also likely to put pressure on ULBs, generate impediments in planned development, and accelerate unhealthy growth with extremely high densities.

4. The tax regime notified for implementation is not broad based and inclusive , but is contradictory to the foremost polices outlined in master plans and other urban development strategies / policies wherein emphasis is laid on the inclusiveness and greater participation of people at large in the development and planning process. It seem that no attempt has been made to make these consistent with prevailing planning ideology, and the ground situation. Results of this regime where ever implemented reflect 30-40 percent efficiency in tax collection. The regime stands adopted and implemented in various parts of the country, has continued exemptions and ignored the economic factors of individual families also which is a must in many ways with growing urbanism. In case economic/income factor is included in the regime, it would minimize exemptions and make regime just and highly inclusive/participatory, enlarge tax base/collections too. This will also ensure participation of poorest of the poor, give them sense of belonging in development process of the cities and towns they live in.

5. The slab factor used in the tax regime is intrinsically biased in favour of large size slabs, though apparently moderate is regressive against small /medium slabs sizes. The factor attached should have been proportionate to the bulk of slab but seems to have been adopted without looking into its implications on lower/medium sections of urban community. It also needs rationalisation for ensuring either equity or cross subsidization which has been ignored by policy makers.

6.In age and construction related factors also, inherent loopholes need to be addressed. With respect to age of housing stock in older parts and urban villages which are predominantly more than 60 years old, and beset with obsolescence, and are in a state of complete disrepair, attaching 0.60 as a factor to these structures and 1.0 to new structures is unjust. In immediate future it will have impact through reduced housing stock due to continued unattended dilapidation and obsolescence.

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