ENERGY CONSERVATION

OBJECTIONS/SUGGESTIONS SUBMITTED BY IIA ON PROPOSED NOTIFICATION ON PROPERTY TAX IN U.P.

1. Rule 4 (1) , (2) and (3) Classification of Property-Location of property falling within the provisions of Sec 174 of the Act will be classified wardwise and within each ward, it shall be classified basing on the situation of property on three different types of roads
   
   Objection:
   
   This system of classification of property is absolutely impractical and unjustified for industrial building and structures. Industrial properties fundamentally differ in nature as well as character from other class of buildings.
   
   Suggestion:
   
   There must be separate classification for industrial properties such that
   
   ( i ) There should be separate single classification for industrial area properties and must be independent of width of roads.
   ( ii ) Industrial buildings must be classified into following two categories
   
   a. Pakka building with R.C.C. roof or R.B. roof.
   b. Shed of all kinds.
   
   The rental value fixed on Category “b” should be lowest and act as base rate. The rental value of category “a” should be twice that of category “b”.
   
   
2. Rule 4A (1) Fixation of minimum monthly rate of rent-Rate on the basis of covered area would be 80% of carpet area based rates for purposes of self-assessment .
   
   Objection:
   
   The explanation in the Rule 4A (1) allows carpet area a discount of 20% over covered area in residential properties where as non residential properties are deprived of any such benefit.
   
   Suggestion:
   
   Industrial properties must be permitted a discount not less than 20% over covered area for the purpose of calculation of Carpet area as in the case of residential properties ..
   
   
3. Rule 4A (2) Fixation of minimum monthly rate of rent-In the case of non residential buildings and land the monthly rate of rent per unit area of covered area and the land shall be multiple of the monthly rate of rent fixed under sub rule (I)
   
   Objection:
   
   This is in gross violation of the property grading norms followed by the state government itself(ref: G.O. No. 2245@9&vk&2&1998 ,y-;w-lh-@91 dtd. 28th. Aug. `1998 issued by the Secretary Housing
   
   Suggestion:
   
   The Use Factor Multiplier for industrial property must not exceed 0.50 whereas for MSME it should not exceed 0.30 and also, those parts of buildings and structures that are utilized for providing facilities to the workers, staff and employees must be excluded for the purpose of annual rental valuation of industrial building.
   
   
4. Rule 4C Tax Assessment.-The assessment of tax shall be made on the following basis:
   
   (a) (i) Calculation of Annual Value of residential buildillgs - Carpet area X fixed per unit area monthly rate of rent X 12 Or Covered area X fixed per unit area monthly rate of rent x 12 x 80%
   (ii) Calculation of Annual Value of residential lands -Area of land x fixed per unit area monthly rate of rent x 12
   
   (b) (i) Calculation of Annual Value of nonresidential buildings -
   Covered area X monthly rate of rent per unit area fixed on the basis of the multiplier in relation With the rate of residential building X 12
   (ii) Calculation of Annual Value of nonresidential lands -Area of land X monthly rate of rent per unit area fixed on the basis of the multiplier in relation with the rate of residential building X 12
   
   Objection:
   
   Rule 4C (b)(ii) provides for valuing land used for nonresidential purposes. This is an open ended provision and does not specify whether absolutely vacant plot of land will be valued with this method, or even that part of land will be valued using this method which is lying vacant and is appurtenant to the factory building that houses plant and machinery.
   
   Suggestion:
   
   It must be very clearly mentioned that Appurtenant land will be excluded from calculation of the industrial property value, only the built up structures will be valued. This would remove all doubts in the mind of the tax payer as well as the Tax assessing officials and save the tax payers from any possible exploitation / harassment due to any misinterpretation due to lack of clarity.