Land tax to be based on usage: Recommendation under govt’s consideration

At present, land tax is based on the categories of corporation, municipality and panchayat: Shutterstock/Jack_the_sparow

Thiruvananthapuram: A recommendation to fix the rate of land tax based on the purpose for which the land utilised is under the consideration of the government. The Revenue department has been asked to study the practicability of implementing the recommendation tendered by the Gulati Institute of Finance and Taxation and submit a report. If the department gives its green signal, the proposal will be announced in the next budget.

In States such as West Bengal, tax was being imposed depending on the category of the land, much earlier. The government considers the reform in the land tax regime as one of the means to raise more revenue in Kerala which is facing a severe financial crisis. At present, land tax is based on the categories of corporation, municipality and panchayat. The highest rate of tax is in corporations, the rate below it in municipalities and the lowest rate in panchayats.

The tax is not based on the purpose for which the land is utilised. The recommendation before the government is to impose higher taxes on lands that are being used for commercial purposes and those with high market value.

The assessment of the government is that imposing a higher tax on those who make large amounts of revenue from the lands would not burden the common man unduly.

Changes in fair value will be delayed; hike as usual
The fair value of land is likely to be increased this year too as usual. Although it was announced in the last budget that the basic fair value would be changed, the committee of officials appointed to study the issue has not submitted its report yet. Therefore, the proposal is likely to be repeated in the next budget.

Fair value came into force in the State in 2010. The norm at present is to consider this as the basic value and increase it by 10% every year. The increase is avoided in election years. There are widespread complaints that the basic value is much lower than the market rate in some places while it is higher in other places. The committee was appointed to resolve this issue.

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