KMC extends full waiver on interest and penalty on property tax by a month

To shore up its revenue, Kolkata Municipal Corporation (KMC) has decided to extend its scheme to fully waive the interest and penalty on unpaid property tax till the end of this financial year.

The decision has come with a rider – from April 1, the waiver would be scaled down to 60% on the interest component from the 100% figure available now.

Of all the revenues that KMC earns, property tax provides the lion’s share.

KMC is one of the 107 civic bodies in the state that are run by administrators since elections could not be held due to the pandemic.

According to the KMC budget documents, property tax was supposed to contribute Rs 1,042.78 crore in a total revenue of Rs 1,972.60 crore or 52%. The figure for 2017-18 was 59.08% and 57% for 2018-19.

There are about 5 lakh property tax payers in the KMC area that had witnessed a sharp dip in payment during the lockdown months especially in the first quarter (April-June) of the current year.

According to the notification on September 29, 2020, defaulters would have got the benefit of 100% waiver on both interest and penalty for “five calendar months from the date of commencement of validity period of waiver.”

The notification also stated that if someone paid up between five months and eight months (from the date of commencement), they would get a 60% waiver on interest and 99% waiver on the penalty.

KMC officials said around 400 big defaulters owe the civic body about Rs 1,500 crore in unpaid dues before the waiver scheme was introduced.

“Property tax is the main source of income for the civic body. To discourage dues, KMC charges 18% interest on unpaid tax. The current scheme to waive interest is to incentivise quick liquidation of dues. This is the fourth extension of the scheme,” said advocate Kumarjit Das, proprietor of tax advisory firm BK Dass.

Das said that it is often seen that of the due amount of property tax, the principal is just a fraction and interest component far outstrips the principal.

KMC officials said they expect that by extending the full waiver for the rest of the month the civic body could collect Rs 200 crore.

“The measure is an attempt to earn revenues by this financial year. There is always a paucity of funds for development work,” remarked Arindam Banerjee, who has worked in the city as a valuation advisor for more than 20 years.

To encourage collection of old dues, KMC introduced the interest waiver scheme on October 1, 2020. The push was so successful that between October 1 last year and February 28, 2021, the civic body mopped up as much as Rs 400 crore.

KMC officials said that on the last day of the scheme, as much as Rs 31 crore of tax was collected.

However, KMC officials indicated that even if their target of mopping up Rs 200 crore in March is met, it would not come close to the target of collecting about Rs 1,000 crore from property tax this fiscal.

More than 15,000 property tax defaulters had appealed to KMC for property tax waiver.

When the scheme was announced on October 1, a deadline of December 31, 2020 was set. It was extended twice – first till January 31 and then to February 28. Witnessing the long queue of defaulters to pay off their dues, KMC officials kept counters open till 6 pm on February 28.

This is not the first time that KMC has offered interest waiver schemes for property owners.

It was first introduced in 2003 when Subrata Mukherjee was the mayor. However, it offered a 50% waiver on the interest that accrued on past dues. Similar schemes were again introduced in 2010 when Sovan Chatterjee was the mayor.

KMC was run by the Trinmaool Congress during those years.