Property tax is all set to be introduced in Punjab after Governor Shivraj V Patil gave his nod to two ordinances clearing the path for its collection in cities with Municipal Councils and Corporations. 

The ordinances concern amendments to Punjab Municipal Act, 1911, for areas with Councils, and the Punjab Municipal Corporation Act, 1976, for those having Corporations, for the purposes of levying the tax, a senior official in the Punjab Local Government department said here today. 

Following the move, people in Punjab will now have to pay the tax on commercial and residential property, including vacant plots, with effect from April 1, 2013. 

However, religious institutions, cow shelters, care centres for stray animals and charitable institutions, those living below the poverty line and freedom fighters have been kept out of the ambit of the tax. 

The state Cabinet had on June 15 given its approval for amendment to the two said Acts in accordance with the recommendations of a sub-panel on the property tax proposal. 

The Cabinet had decided to do away with the method of zone-wise unit value-based property tax calculation and settle instead for the old Annual Value System after opposition from several quarters, including from Shiromani Akali Dal ally BJP. 

As per the new formula devised by the Cabinet, collector rates would be added to the construction area of the property to arrive at its total value after deducting 10 per cent as depreciation charges for residential houses. 

Thereafter, 5 per cent of the total value of the property would be worked out as the Annual Value of the property on which the tax is to be levied. 

For self-occupied houses of up to 50 sq.Yards, a consolidated Rs 50 per year would be charged while for houses between 50 to 100 sq.Yards, the tax would be Rs 150. 

For self-occupied houses between 100 to 500 sq.Yards, the property tax would be charged at a rate of 0.5 per cent of the Annual Value while for houses above 500 sq.Yards, payment is to be calculated at a rate of 1 per cent of the Annual Value. 

For vacant plots and un-utilised buildings and plots, the tax will be 0.2 per cent of the Annual Value. 

Meanwhile, from the earlier house tax of 15 per cent of Annual Rental Value for commercial rented property, the rates were reduced to 10 per cent while for rental residential property, the threshold was brought down from 10 per cent to 7.5 per cent per annum. 

Similarly, for non-rented commercial property, the rates were reduced from the earlier 15 per cent to 3 per cent of the Annual Value. (Business Standard)