Revenues Rise

PMC’s online property tax payment system improves collections

The Pune Municipal Corporation (PMC) has been taking various technology initiatives to improve the delivery of municipal services in the 48 zones that come under its jurisdiction. For instance, the civic agency launched a website for dissemination of information on the planned 24×7 water supply project. As a part of this project, PMC would deploy water meters, reduce water leakages (through radio frequency technology) and conduct water audits.

PMC has launched a waste-to-green project to process 700 tonnes of dry waste and generate 10 MW of power every day. Moreover, it has also initiated e-applications of Aadhaar cards, and online registration of complaints related to drainage, property, roads, encroachment, etc. One of the key initiatives taken by the civic agency has been the online property tax collection system, implemented to increase efficiency and transparency and facilitate payments by owners.

In April 2014, the property tax department of PMC launched its own website to help citizens resolve their property tax issues. The website offers services like online tax payment, registration or transfer of property and self-assessment of the tax payable by over 0.75 million property owners. Concerns like erroneous tax bills, incorrect tax imposition and unavailability of correct information were the main reasons behind the launch of a separate web portal for property tax collection. PMC collects property tax on residential houses (occupied or let out), office buildings, factory buildings, godowns, flats and shops. The tax is determined by multiplying the fair market value of the property by the current tax rate. Property tax forms one of the key sources of revenue for PMC.

Smart Utilities takes a look at some of the recent developments in the civic agency’s property tax collection system…

Background

Prior to adopting the online system, PMC used to deliver property tax bills to citizens at their doorstep. Property owners often complained about untimely delivery of bills, faulty calculations and incorrect imposition of tax. This prevented owners from availing of the benefits under rebate schemes offered by PMC. In order to address these concerns and streamline the tax collection process, the property tax department took several initiatives.

Between December 2007 and January 2008, it started an online billing facility in each ward office and citizen facilitation centre (CFC). This obviated the need for standing in long queues at the civic agency headquarters for payment of tax, which acted as a deterrent. PMC also provided a tax payment facility at the kiosk centres that were set up by the civic agency. In 2008-09, it entered into an agreement with HDFC Bank and ICICI Bank under which citizens could pay their taxes through the payment portal of either bank. In addition, drop boxes were placed in the Bank of Maharashtra branches to facilitate payment by cheque. Subsequently, it tied up with Cosmos Bank for online payment of property tax.

The CFCs and kiosk centres remain open on specific public holidays in order to make it convenient for citizens to make payments. Further, the civic agency offers a 10 per cent discount to those citizens who make their payments before May 31 of every financial year. In case of payment delays, it levies a penalty of 2 per cent per month for delays in tax payment. This mechanism results in the timely payment of taxes by citizens.

To reduce errors in tax calculations and deliver bills on time, the property tax department launched self-assessment tax software on PMC’s website in 2013. The civic agency also adopted a geographic information system (GIS)-based property identification system. GIS mapping provides a unique code to each property, which is a combination of the ward number, the street number and the plot number. PMC has conducted household surveys under GIS-based property taxation. In addition, regular surveys are being undertaken to bring new properties under the tax regime. The system will help the civic agency to track tax payments and identify defaulters.

Despite these initiatives, citizens often faced problems in finding relevant information on the PMC website. Moreover, there were instances when the online payment system was not fully functional in several CFCs and kiosk centres.

Recent developments

In April 2014, the property tax department of PMC launched a separate website. This website offers several services including property tax assessment, tax appeals and submission of applications for transfers, obtaining concessions and  no-objection certificates (NOCs), and correction of arrears. It also addresses concerns related to breakdowns and technical glitches encountered at the CFCs and kiosk centres.

As per the procedure outlined on this website, the owner has to fill in some property-related details like location, area of property and use of property in an online form, which, once submitted, will instantly calculate the tax due based on the annual rateable value method. Besides, the website provides online tax payment facility. The payment can be made either through debit/credit cards or net banking. The portal generates a payment receipt for future reference.

PMC has also taken initiatives for the promotion of environment conservation through its property tax regime. The civic agency offers a tax rebate of 5 per cent at the end of every financial year to owners for deploying a rainwater harvesting (RWH) system. To avail of this benefit, the property owner has to submit an application for inspection of the RWH system to PMC’s building permission department. After inspection, an NOC is handed over by the chief engineer of the building permission department. Thereafter, the owner needs to submit an application to the property tax department along with the NOC for receiving a tax rebate.

Key outcomes

These tax recovery measures have led to a significant increase in the property tax collection made by PMC. The revenue from property tax increased from Rs 1.11 billion in 2003-04 to about Rs 7.5 billion in 2013-14. In addition, these measures have increased the coverage of the system to about 85 per cent.

Pune has made significant progress in water conservation. Reportedly, as of March 2014, about 452 applications were received for rebate under RWH, as compared to 44 applications in March 2010. Due to the increase in the number of applicants, citizens achieved a total tax saving of about Rs 3.5 billion. This not only helped in the conservation of groundwater but also resulted in timely payment of tax.

However, these measures are not sufficient for collecting tax dues. The estimated arrears in the payment of property tax stand at about Rs 6 billion. Though the civic agency has seen a significant increase in the number of applications for rebate under RWH, most of these systems are in a deplorable condition. According to sources, nearly 10,000 RWH structures are constructed every year in order to obtain a rebate in property tax. Despite this, not more than 2,000 buildings in the city are harvesting water properly. Therefore, in order to reap the benefits of RWH, the civic agency needs to shift its focus from mere installation of RWH systems to their functioning. Further, even those who maintain RWH systems have not been given the rebate due to mismanagement on the part of the civic agency. Therefore, there is a need to put a more stringent tax collection process in place.

Despite inconsistencies in the system, the progress made by PMC is commendable. According to the calibrated score published by the Jawaharlal Nehru National Urban Renewal Mission, which is based on the extent of reforms taken up by a civic agency, Pune has fully implemented all property-related reforms underlined by the programme. Much of the credit goes to the online tax collection system, which has increased revenues by 700 per cent. PMC’s initiative to increase property tax collection, coverage and efficiency will serve as an example for other utilities to take similar steps in order to improve their collection systems.

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