Corporation hikes property tax for IT parks

The Chennai Corporation Council on Monday voted to create a special category for IT parks to allow for the collection of property tax in line with other comparable properties. The Council also approved a proposal to regularise the property tax rates for all 15 zones, which currently see different rates, thanks to the different local bodies they have come under.

The civic body has said that it would look into methods to bring the property tax collection from IT parks on a par with other high-income properties in the city. The announcement had been made by Mayor Saidai S Duraisamy in his budget speech for 2012-13.

So far, the Corporation has been using three categories to fix the property tax to be collected – residential, non-residential commercial and special buildings. The first two categories are self-explanatory, and the special buildings category included nursing homes, hospitals, star hotels, lodging houses, cinema theatres and marriage halls. IT parks have so far had their property tax assessments in the non-residential category. This assessment had been viewed as sub-optimal by the Corporation administration.

Now, the Council has voted to include IT parks in the special buildings category. This will bring all such buildings in the 15 zones of the Coroporation under a higher property tax regime.

“In some parts, just because they are close to one another, we find buildings have fetched a rent of `60  being assessed to the same scale of property tax as buildings that fetch a rent of `1,200. This is because IT parks did not have their own category,” said Duraisamy to the councillors, by way of an explanation. The Corporation has incresed focus on IT parks since its expansion in 2011. A number of IT parks associated with Chennai were in areas previously governed by different local bodies. A study by the civic body revealed that while there were no IT parks in five zones, the other 10 zones had 344 IT parks. They accounted for an estimated 3.3 crore square feet of built up area and contributed close to `10.84 crore in property tax. That is an asverage of `3.29/sq ft.

The Corporation created four zones, categorising each street to a corresponding level of property tax. Buildings in each of these zones are to be assessed for their property tax as a certain percentage over the basic rate (see table). Under this system, IT parks in Zone ‘A’ will have their property tax pegged 50 percent over the existing rate. The number will be 75 percent in Zone ‘B’, 100 percent in Zone ‘C’ and 200 percent in Zone ‘D’.

The new regime is also aimed at bringing uniformity to property tax assessments of IT parks.  The Mayor also clarified councillors’ questions over the move that IT companies had been given sops to attract them to invest along the IT corridor. While none of the sops being offered by the State government would be affected, the property tax regularisation was aimed at bringing parity in the rates across the city.