Patna Municipal Corporation achieves 70% holding tax collection last year

Patna: Even as it collected holding tax at the doubled rate for three months in 2013-14, the Patna Municipal Corporation (PMC) could collect only 70 % of the total arrears and current demand of the tax for the year. The total collection stood at around Rs 29 crore against the total demand of about Rs 41 crore.

Admitting that for over one decade the PMC has been running in losses, a senior PMC official said that if all past arrears are recovered, the civic body would be able to run in profit. He expressed concern over the prospects of holding tax collection in the current year, saying, “The government has taken back the decision of doubling the rate of holding tax. We have to adjust the higher tax paid by many this year. This will definitely affect our holding tax collection this year, which is expected to go down.”

The corporation has been running under losses for years and poor holding tax collection is one of the reasons behind it. In 2013-14, it faced a deficit of Rs 29 crore, with total income generated being Rs 332 crore and expenditure being Rs 361 crore. In the previous year (2012-13), when the corporation faced a deficit of Rs 49 crore (income of Rs 227 crore and expenditure of Rs 276 crore), its holding tax collection was 85.52% of the total demand.

According to PMC data, the corporation has not been able to collect total demand of holding tax for years. It could collect only 88.46% of the demand in 2011-12, 74.89% in 2010-11 and 76.02% in 2009-10.

“One of the major reasons why we cannot collect total holding tax is shortage of staff,” said a senior PMC official. The holding tax is being collected not only by permanent staff tax collectors but also by cleaners, wiremen, electricity mechanics, helpers, painters and many others who are not qualified enough to collect taxes or even calculate them.

Before 1993, the tax collectors used to charge almost any amount as per their wish from the house owners. In 1993, after the introduction of Assessment of Annual Rental Value of Holding Rules, the holding tax was fixed at 9% of the annual rental value, and since then tax collectors visit every house to collect holding tax.

But now, according to new PMC rule and regulation, the residents will have to make self-assessment of their property and pay holding tax. No demand will be made by the corporation before the last date has passed. In the second amendment in Bihar Municipal Act-2007, a new recovery regulation has been incorporated. It says that PMC won’t make demand for holding tax. This has become applicable from April 4, 2014.

Courtesy: TNN