Procedure for Assessment of Property Tax Nagpur Municipal Corporation

The Property Tax Assessment and Recovery Department of the Nagpur Municipal Corporation is currently situated in the City Town Hall premises in Mahal, Nagpur. This department is decentralized and is being acted through zonal offices of NMC.

The City of Nagpur Corporation Act 1948 under Sections 114, 115, 115 (A), empowers Corporation to impose Property Tax upon all lands and buildings within the city, namely: 1. General tax 2. Sewerage tax 3. Water tax 4. Lighting tax 5. Fire Service tax 6. Education Cess 7. Employment Guarantee Cess 8. Larger area Residential premises Tax In addition to the above, the Corporation can also levy Sewerage Benefit Tax, Water Benefit Tax and Street Tax which are not yet imposed by the Corporation.

The City is divided into 136 electoral Wards, Recently the NMC has undertaken a work of Geographical information System (GIS) in consultation with MRSAC and in future the assessment of the property tax shall be done considering 136 wards system. However, presently for the purpose of Assessment work is carried out as per old 75 wards. In order to make assessment procedure transparent, Nagpur Municipal Corporation has made an effort to make self assessment possible for the property owners.

Assessment Procedure:

All the assessable properties are broadly divided into three categories namely : 1. Residential 2. Non-residential 3. Open plots

The Property tax is assessed, based on the Annual value of Land. The AnnuaI Value of the land shall be deemed to be the gross annual rent of which the land might at the time of assessment, reasonably be expected to be let from year to year. These properties are assessed to taxes that are worked out by certain percentage on the Annual Letting Value (ALV) of these properties. The ALV of a property is the gross annual rent at which the said property together with its appurtenances and any furniture that may be let for user of enjoyment therewith, might reasonably at the time of assessment be expected to be let from year to year, less an allowance of ten percent for the cost of repairs and for all other expenses necessary to maintain the property in a state to command.

In determining the ALV of any property, the following factors are considered : a. Location of the Properly b. Nature of construction ( Type of construction ) c. Level of service d. Age and present condition of the building e. Location advantage of the Property f. Prevailing rents for similar building in the neighbourhood. g. The rents actually fixed either by contract or law. To ascertain the type of construction of a property, all properties in NMC limits are divided into six categories as follows.

Table below showing classification of structures on the basis of Type of construction.

TABLE - A NO CLASS SPECIFICATIONS 1 I-A Posh Building of about 100 Years life. Posh Construction First Class Pucca building of RCC structure, wall of table moulded brick in cement mortar, cement plaster on both sides, first class wood-work and tiled flooring. 2 I-A Building of about 100 Years life. First Class Pucca building of RCC structure, wall of table moulded brick in cement mortar, cement plaster on both sides, first class wood-work and tiled flooring. 3 I-B Building of about 50 Years life.Other specification similar to I A but thin walls and slightly inferior specifications. 4 II Building of about 30 Years life. Plinth of stone masonary in cement mortar The walls of 2nd class Table Moulded brick in cement mortar. Cement plaster on both sides or on one side with Mangalore tiles. 5 III Building of about 25 Years life.Plinth of stone masonary in cement mortar or Table Moulded brick in cement mortar Walls of K.B. (Khanjar Bricks) in clay with cement plaster inside and cement or lime pointing. Floor & roof, Mud floor or Bagra or Country tiles 6 IV Building of about 20 Years life. Plinth of stone masonary in cement or lime mortar. Mud walls, Mud plaster on both sides. Floor is of mud and roof of country tiles or sheet roofing. 7 V Building of about 15 Years life. Plinth of Mud, walls, tatta or sind roof - country tiles and grass with mud floor.

PROCEDURE FOR CALCULATION OF ANNUAL LETTING VALUE OF BUILDINGS: In case of buildings , initially total plinth area needs to be measured and total built up area of building is to be worked out. After that, the area covered by latrine, bath room and staircase is excluded from total built up area. Half the rental rate should be taken for areas covered by verandah. In the new reforms system it is advisable to deduct 15% of the gross area to calculated net considerable area for taxation purpose. a. For calculation of ALV following method to be used b. For the first 46.45 sq.mt built up area full rate, as per the rent chart or rent as per reforms through formula should be charged. c. For the next 46.45 sq. mt of built up area 80 percent of such full rate should be charged. d. For the next 46.45 sq. mt of built up area 70 percent of the full rate should be charged. e. For remaining built up area exceeding 139.35 sq.mt 60 percent of the full rate should be charged. f. Such full rate shall be charged for the ground floor while there will be reduction of 10 percent of the full rate for every upper floor subject to a maximum reduction of 30 percent of the full rate. In the case of buildings which are occupied for Non-Residential purposes the rate as per rent chart for Non-Residential use of property should be adopted as under : a. For ground floor built up area up to depth of first 7.62 Mt. or up to first cross/ intercepting wall, full rate, as per the rent chart or rent as per reforms through formula should be charged. b. For the remaining area, 50 percent of such full rate should be charged. c. For the upper floors built up area up to depth of 7.62 tm. or up to first cross / intercepting wall, 70 percent of such full rate should be charged. d. For the remaining built up area of upper floors, 35 percent of such full rate should be charged. e. If the upper floors are used for residential purposes, the assessment is to be done its above. f. For Flat Schemes, the rent per month per Sq.M. calculated for ground floor is applicable for all floors. There is no reduction of rent per sqmt per month for upper floors.

For the calculation of monthly rent for the building as per reforms following formula is to be considered.

Rate(Rent) / Sq.Mtr / Month = Base Rate (Rent) x SF x LF x UF x OF x AF Where : SF = Structural Factor LF = Location Factor UF = Use Factor OF = Occupation Factor AF = Age Factor The base rate (rent)in above formula is same for all Properties in the city

For the calculation of monthly rent for the building as per reforms following formula is to be considered. Rate (Rent) / Sq.Mtr / Month = Base rate (Rent) x LF x UF x OF Where : LF = Location Factor UF = Use Factor OF = Occupancy Factor The base rate (Rent) in above formula is same for all open plots in the city

In short for the Revaluation of property tax the monthly rent is to be worked out by using above formula. We may call this system as new reforms. And for the calculation of property tax before the said revaluation of property tax monthly rent is to be evaluated through rent chart, the system may be called as old system.

DEFINITION OF UNIT

Portion of house occupied by one single family is deemed to be a separate unit. One building may comprise of more than one unit . Annual letting value of each unit needs to be worked out separately and tax is to be calculated accordingly.

EFFECT OF ASSESSMENT The assessment effect is taken from the beginning of the quarter following the date on which the building is added to the assessment list or from the date when it is occupied or let out, i.e. 1st January, 1st April, 1st July, 1st October of every year. a. If building is completed or let out in January or February before 31st March, effect of assessment is taken from 1st January. b. If it is month of April, May or before 30th June, then assessment effect is to be taken from 1st April. c. If it is month of July, August or before 30th September, then effect of assessment is to betaken from 1st July. d. If it is in month of October, Nov or before 31st December, then the assessment effect is to be taken from 1st October.

PROCEDURE TO ASCERTAIN THE ANNUAL LETTING VALUE OF BUILDING (RESIDENTIAL):

Class of building depending upon specification as shown in Table A is to be determined. Then total plinth area and built up area has to be worked out and ultimate the considerable b/u area is to be worked out.

For the property in question monthly rent either as per old system or as per new reforms as the case may be is to be worked out. On the basis of monthly rent of building yearly rent needs to be worked out. From yearly rent statutory deduction is made for repairs & maintenance (10 %). If the house is not fitted with NMC's water connection or without water meter connection, but still, if the corporation water line from where water line connection can be taken is within a distance 200.00 meter from the house, general water rate is leviable. So, after making these statutory deduction from yearly rent net or annual letting value of building can be determined.

So, on Net Annual Letting Value, various taxes like General Tax, Sewerage Tax, Water Tax, Lighting Tax, Fire Service Tax, Education Cess and in case of non - residential house in addition to above taxes, employment Guaranty cess is to be calculated as per the percentage and rates given in Table B.

PROCEDURE TO ASCERTAIN THE ANNUAL LETTING VALUE (ALV) OF NON RESIDENTIAL BUILDING:

In case of non- residential house, width and depth of house is measured, total built up area is worked out and finally considerable b/u area is to be calculated. The rent to be considered either through old system or as per new reforms as the case may be, full rent is considered for area upto first intercepting wall or upto 7.62 mt. depth (width of house is taken parallel to main road)

For remaining area after first intercepting wall or after 7.62 mt depth, 50 % of such rent is to be levied. For other floors (F.F, S.F, & Upper Floor) upto first intercepting wall or upto 7.62 mt. depth, 70 % of such rent is to be considered and for remaining area, 35 % of such rent is to be taken.

In short for calculating of monthly rent either old or new reforms system as the case may be adopted. In this way total monthly rent for all floors be worked out. On the basis of the monthly rent, yearly rent (Gross Annual Rent) be determined. From gross annual letting value 10 % is deducted for maintenance. Thus, the Annual Letting Value is worked out.

Various Taxes (Sewerage Tax, General Tax, Water Tax, Lighting Tax, Fire Service Tax, Education Cess, Employment Guarantee Cess) be calculated on the basis of net ALV. Rates of these taxes according to slab of Annual Letting Value is given in Table B.

PROCEDURE FOR DETERMINING ANNUAL LETTING VALUE (ALV) OF TENANTOCCUPIED PORTION: (As per old system)

In case of tenant occupied premises tenant portion is measured separately and total built up area be worked out. Deduction be made for latrine , bath room and staircase area and type of building be ascertained (As per Specification given in Table - A).

Declaration of rent from house owner as well as from tenant be obtained in the notice form under section 125. If declared rent is found to be reasonable and fair, commensurating with the class of the building and area occupied by tenant and higher than the NMC's rate of rent of that area, then the tenant's declared rent is to be taken for assessment and if the tenant's rent is lower than NMC's ready reckoner rent then NMC rent chart be adopted.

PROCEDURE FOR DETERMINING ANNUAL LETTING VALUE (ALV) OF TENANTOCCUPIED PORTION: (As per for new reforms system)

In the context of revaluation of property tax as per new reforms monthly rent is worked out by given formula and index mention as per annexure I and the ALV is worked out as usual.

PROCEDURE FOR DETERMINING ANNUAL LETTING VALUE OF OPEN PLOTS:

In case of open plot on the basis of the size of plot, total open plot area is to be worked out . The ward or block in which open plot is located be identified. Adopting corresponding rent of open plot of that ward or of block of ward monthly rent be worked out. In the context of revaluation of property tax as per new reforms monthly rent is worked out by given formula and index mentioned as per annexure I & II. On this basis, gross annual rent, be worked out from Gross Annual Rent, 10 % deduction be made for maintenance. Annual Letting Value so worked out is to be considered. calculating various taxes such as General tax, Sewerage tax, Water tax, Lighting tax, Fire tax , Education cess and those be levied. Rates of these taxes according to slab of Annual Letting Value is given in Table B.