Unit Area Assessment to be implemented in New Town for property tax calculation

 The Unit Area Assessment (UAA) system will be introduced in New Town for calculation, assessment and property taxes within its jurisdiction.

Property tax is one of the main sources of internal revenue of urban local bodies. As the property tax is determined on the basis of annual valuation of lands and buildings, the entire process of determining property tax is solely dependent on the assessment of lands and buildings.

It may be mentioned that Kolkata Municipal Corporation (KMC), the oldest civic body in the country has introduced UAA from the 2017-18 financial year, the first-of-its kind in the state. It was the Asian Development Bank (ADB) which had given loans to KMC (between 2000-2005) and had asked the civic authorities to streamline its revenue collection system. Accordingly, a committee was set up under the chairmanship of the then municipal commissioner Alapan Bandopadhyay (now the principal secretary, Transport department) who came up with the new method of assessing property tax.

It has been decided that entire New Town will be divided into 34 areas with each accorded a specific identification category ranging from A to G, with a Base Unit Area Value (BUAV) in Rs/sqft assigned to each such category, taking into various factors like cost of land, cost of construction, land use pattern etc with A having the highest BUAV and G having the lowest to ensure macro level equity across New Town.

To account for the heterogeneity among properties within an area, Multiplicative Factors (MFs), each assigned with numerical values in a range of 0.5 to 8 have been introduced. MFs would account for variations in terms of age, location, type of structure, type of use and occupancy which would be used to increase or decrease or to not increase or decrease Base Unit Area Values of different properties situated within a categorised area as applicable.

For covered spaces/ building the formula that is followed is: BUAV x MFs =BUAV (corresponding to the area in Rs per sqft per annum x (age x location x structure x use x occupancy) = final BUAV. Property tax = Final BUAV x covered area (in sqft) x applicable percentage of tax.

In case of a vacant land/ land comprising buildings, the formula is: BUAV x MFs = BUAV (rupees per sqft per annum) x (location x use) = final BUAV. Property tax = final BUAV x vacant plot area x applicable percentage of tax.

The present system of calculating property tax is based either on the principle of Annual Rateable Value method or Capital value Method. 

With the growing rate of urbanisation and change in the socio-economic scenario, the flaws in these two systems are gradually surfacing. Because of the loopholes in these systems, property tax is falling fast affecting the coffer of urban local bodies dearly and hence the UAA system has been framed to augment revenue collection and making the property tax collecting method transparent.