Infrastructure cess from April 1

Infrastructure cess from April 1
The Times of India

Bangalore: It had to be done sometime and here it is now. Greater Bangaloreans will finally have to pay the infrastructure cess starting April 1.
After dilly-dallying for two years, the state government has decided to impose this cess, which was to have come into effect in 2005. The cess is applicable to all vehicle-users — two-wheeler and fourwheeler commuters, autorickshaws.
Explains Vasanth Rao, DC (Resources) at the BBMP: “Infrastructure cess will come into force from April 2007. A cess is always meant for a specific purpose and this will be used for infrastructure like roads, flyovers, grade-separators. After studying all the mechanisms of collection, we decided that insurance companies were the best bet.’’ Accordingly, the BBMP, which is the implementing and collecting agency for this particular cess, is looking at tie-ups with insurance companies.
The modus operandi works thus — vehicle users have to get their insurance renewed annually. That is when they can also pay the annual cess with different slabs for two-, three- and four-wheelers.
When implemented, Bangalore’s urban local body would be one of the few in the country to impose infrastructure cess on its citizens. The cess finds mention in the Karnataka Municipal Corporation Act 1976, Sec 7-B of Taxation Rules — “The infrastructure cess imposed on motor vehicles shall be leviable primarily from the registered owner or a person in possession or control of a motor vehicle, which is the subject of a hire purchase, agreement... the cess shall be paid and return filed in Form I-B in duplicate to the commissioner or authorised officer.’’
The cess, which was spelt out in both the 2005 and 2006 urban local bodies’ budgets, could not be implemented as a corollary of the glaring bad infrastructure.
“When people persistently complained about bad infrastructure, it didn't make sense to impose an infrastructure cess, and this was the clarion call for two years now,’’ say sources. From the official vehicle statistics, the BBMP hopes to get over Rs 50 crore as revenue from this exercise. PAY TIME
Here is how much each vehicle-user will have to pay once the infrastructure cess comes into force: Two-wheelers: Rs 50 Three-wheelers: Rs 100 Four-wheelers: Rs 300 Pass. vehicles: Rs 400 Goods carriers: Rs 500 Bangaloreans will continue with SAS S Kushala | TNN
Bangalore: One big city, two boundaries and two kinds of property taxes.
Yes, the 70 lakh-odd citizenry will pay property taxes under two different schemes — the Self-Assessment Scheme (SAS) and Capital Value System (CVS) for the coming fiscal.
Property owners under the erstwhile BMP will continue to pay property taxes under Annual Rental Value-based SAS and those belonging to the former CMCs/TMC will pay under the CVS.
With April 1 being the opening of property tax collection for 2007-08, the BBMP is yet to come out with a uniform tax system. For the forthcoming fiscal, it will be a blend of both.
“Property owners under the erstwhile urban local bodies have been paying taxes under CVS, whereas in villages, property tax is being levied as per the Village Panchayat Act. The BMP residents followed SAS from 2000. It’s going to be the same pattern this year too as we have not come out with a uniform tax policy,’’ officials explained to The Times of India.
For BBMP, the SAS scheme expired on March 31, 2005 and in the meantime KMC Act was amended so as to levy property tax under CVS with effect from April 2003. However, the BBMP is not ready with the scheme.
Instead of CVS, the BBMP is also thinking of a 30% increase in the rates under the SAS without a cap. However, this is not seen as a feasible option as the taxes will shoot up and pinch the payers.
According to officials, though the implementation of CVS for Bangalore is mandated in the Act, the design is faulty and in its present form, almost unimplementable. Reason being: the tax will increase for residential properties and decrease for commercial properties. There is no method for assessment of apartments and all high-rise buildings. “The CVS has to be implemented with some amendments. We need to revise the taxes in a manner that will give some buoyancy and not tinker with the SAS for the sake of immediate gains. People will not like frequent changes in the taxes,’’ officials added.
Tax study
SAS: Self-Assessment Scheme is based on Annual Rental Value where property tax is calculated based on annual rent. A 50% rebate is given for owner-occupied, both residential and non-residential buildings. Penalty for defaulters is 5%
CVS: Capital Value System of tax collection is based on guidance value of the land, fixed by the stamps and registration department and cost of the building as per the rates listed by the PWD. A 50% rebate is given for owner-occupied residential buildings. Penalty for defaulters is 24%