The Ministry of Home Affairs has made a substantial move enabling the government of the Union Territory of Jammu and Kashmir to impose Property Tax through municipal corporation and committees.

The changes have been brought in by way of several amendments in the Jammu and Kashmir Municipal Act, 2000 and Jammu and Kashmir Municipal Corporation Act, 2000 carried through the Jammu and Kashmir Reorganization (Adaptation of State Laws) Order, 2020 issued by the Union Home Secretary, Ajay Kumar Bhalla.

One major amendment in the J&K Municipal Act, 2000 whereby the Municipal Councils and Committees have been established, the Ministry of Home Affairs has substituted Sections 72 to 80 and now Section 72 states: “Unless exempted under this Act or any other law for the time being in force, Property Tax shall be levied on all lands and buildings or vacant lands or both situated within the Municipal area. The Property Tax shall be levied at such percentage not exceeding 15 per cent of the taxable annual value of land and building or vacant land or both as the Government may, by notification, from time to time specify”.

Similarly, Section 73 read: “The taxable annual value of land and building or vacant land assessable to taxes under this Act shall be calculated by multiplying the corresponding unit area value with the total build-up area of a building or the total area of land, as the case may be, minus depreciation, at such rates as may be prescribed, depending on the age of the building”.

By virtue of the amendments, a J&K Property Tax Board has also been constituted.

While in 2011 the then J&K government had sought to introduce amendments in J&K Municipal Act and J&K Municipal Corporation Act as a first step towards imposition of Property Tax in the state, owing to stiff political opposition the bills lapsed and no such amendments could be made.

Those who had then opposed the move had argued that due to a fragile economic environment, often hit by hartals, curfews and other disruptions, introduction of property tax could impede efforts towards economic revival, especially in tourism and real estate sectors.

Here are the snippets of the order notified in the Gazette of India :

In the amended J&K Municipal Act, 2000, Section 72 states: “Unless exempted under this Act or any other law for the time being in force, Property Tax shall be levied on all lands and buildings or vacant lands or both situated within the Municipal area. The Property Tax shall be levied at such percentage not exceeding 15 per cent of the taxable annual value of land and building or vacant land or both as the Government may, by notification, from time to time specify”.

Similarly, Section 73 read: “The taxable annual value of land and building or vacant land assessable to taxes under this Act shall be calculated by multiplying the corresponding unit area value with the total build-up area of a building or the total area of land, as the case may be, minus depreciation, at such rates as may be prescribed, depending on the age of the building”.

Can a lump sum amount also be introduced rather than blanket percentage?

However, a proviso has been incorporated vide which the Municipality may, after passing a resolution, fix a lump sum amount not exceeding the sum payable as annual tax for certain categories of property. However, the resolution shall come into effect only after it is approved by the Government.

Are self-occupied residential properties taxable?

The Property Tax payable shall be reduced by 25 percent in respect of a self-occupied building used for residential purpose and such class of self-occupied non-residential building as may be notified by the Government on the recommendation of the Municipality. Moreover, there is a provision vide which a person liable to pay the Property Tax shall pay the same in two equal instalments.

How will tax assessment be done?

“Every owner or occupier, who is liable to pay Property Tax, shall every year submit to the Executive Officer or any officer authorized by him in this behalf a return in the prescribed form within the stipulated period and in the prescribed manner”, the new Sections read. Moreover, there is a provision for scrutiny of the return filed and in case of non-compliance action will be initiated.

The Property Tax assessed and levied shall be subject to revision once in three years by enhancing the tax by such percentage not exceeding 10 percent of the tax as may be prescribed, commencing from the financial year from which the Property Tax is determined.

The Property Tax shall be primarily leviable and payable if the land or building is let upon the lessor; if the land or building is sub-let upon the super lessor and if the land or building is unlet upon the person in whom the right to left the same vests. However, if any land has been let for a term exceeding one year to a tenant and such tenant has built upon the land, the Property Tax assessed in respect of that land and the building erected thereon shall be primarily leviable upon the said tenant whether the land, building or both are in occupation of such tenant or a sub-tenant of such tenant.

As per the new provisions, the Government may, by order exempt, in whole or in part, from the payment of any tax payable under the Act by any person or class of persons or in respect of any property or description of property. Any appeal against the tax shall lie to the Jammu and Kashmir Property Tax Board.

As per the new provisions, when any new building is erected or any existing building is reconstructed or altered or improved or when any building which has been vacant is re-occupied, the person primarily liable to pay tax shall given notice in writing to the Executive Officer within 15 days from the date of its completion or occupation.

When any building or any portion thereof, which is liable to tax, is demolished or removed, otherwise than by or under an order of the Municipality, the person primarily liable for the payment of tax shall give notice in writing. Until notice is given, the person primarily responsible for payment of tax shall continue to be liable to pay such taxes as he would have been liable to pay in respect of such building if the same or any portion thereof had been demolished or removed.

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