Bhubaneswar Municipal Corporation (BMC) faces a significant loss in tax revenue as around 5,000 residential properties are being used for commercial purposes in violation of tax norms. BMC conducted a recent survey that uncovered these violations, prompting the authorities to reassess taxes for such properties. Additionally, the state government has empowered BMC to collect holding taxes from establishments on Odisha Industrial Infrastructure Development Corporation (IDCO) land, with the aim of increasing tax collection to INR 115 crore by the end of the fiscal year.
A recent survey by the Bhubaneswar Municipal Corporation (BMC) revealed a concerning trend: approximately 5,000 residential properties in Bhubaneswar are being used for commercial purposes, violating tax regulations and resulting in revenue losses for the BMC. BMC officials conducting a thorough door-to-door survey from November to February, along with complaints registered by residents with ward officers, brought this revelation to light.
According to Priyabrata Padhi, BMC's deputy commissioner of revenue, out of the city's 1.20 lakh properties, approximately 5,000 cases of such violations have been identified. He emphasised the need for a continuous monitoring mechanism to ensure accurate information about property usage, as property dynamics often change. For instance, if a residential building's ground floor is converted to commercial use in subsequent years, the tax assessment must reflect this change.
Due to the higher tax rates applicable to commercial properties, many individuals evade tax obligations by concealing their commercial activities from civic authorities. BMC officials have intensified efforts to collect holding taxes, especially with the fiscal year drawing to a close. It has identified approximately 100 defaulters with outstanding tax dues exceeding INR 10 lakh each. Furthermore, the state government has granted BMC the authority to collect holding taxes from establishments located on land owned by the Odisha Industrial Infrastructure Development Corporation (IDCO).
Previously, BMC lacked the authority to collect taxes from such establishments, as they received basic amenities from IDCO rather than BMC. This fiscal year, BMC aims to collect INR 115 crore in holding taxes. Holding taxes are levied based on the Orissa Municipal Act, 1950, which still employs outdated tax rates. As land values have risen in various parts of the city, tax assessments have been revised upward. However, the Orissa High Court has suspended tax collection based on the revised rates for 2021, reverting to the old rates in the interim.
In conclusion, BMC faces challenges in enforcing tax regulations and ensuring compliance among property owners in Bhubaneswar. With a large number of residential properties being misused for commercial purposes, the BMC must enhance its monitoring mechanisms to safeguard against revenue losses. Additionally, efforts to collect holding taxes from defaulters and establishments on IDCO land are crucial for strengthening the BMC's financial resources and facilitating essential civic services for the city's residents.
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