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YCP plans to raise property taxes

by Staff
207 views Vijayawada

The YSRCP government issued orders to levy property tax based on the capital value of the asset. Earlier, the tax was levied on the annual rental value of the property. The move is likely to increase property tax burden drastically. The state government is expected to raise more than Rs. 8,000 crore per year with the new tax regime, as compared to Rs. 2,900 crore in the existing system. The tax will be determined by the market value of the asset as fixed by the Stamps and Registration Department. 

The tax levied will be a percentage of the capital value of lands or buildings or both, not less than 0.10% and not more than 0.50% of the value for residential property. In the case of commercial buildings, it will be at least 0.20% and not more than 2% of capital value. Moreover, if the property tax is higher with the rental system than the capital value system, tax will not be lowered. Instead, a nominal 2% will be added for such structures. 

The Federation of Andhra Pradesh Chambers of Commerce and Industry (FAPCCI) has urged the government to defer the implementation of the changed system. The FAPCCI stated that rental values in the state have declined by 20% for residential and 50% for commercial properties due to the COVID-19 pandemic. Many commercial buildings were shut and there was no rental income for numerous home owners. In such situations, changing the tax system would only increase the burden on people of Andhra Pradesh. 

The older system ensures higher tax burden in corporate and commercial areas. With the new system, taxes will increase each year based on revisions in land prices by the Stamps and Registration Department. It is likely to increase the burden on individual home owners and hence, tenants. Opposition parties in Andhra Pradesh have objected to the capital value system stating that it would increase the burden on taxpayers and the government must withdraw the orders.

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