Municipal corporations hold the prerogative to levy taxes on properties that individuals and other commercial bodies own within its geographical boundaries. Property tax accounts for a considerable portion of a municipal body’s income.

These civic bodies utilize the tax they collect on account of properties in its vicinity to undertake developmental projects as well as maintain basic amenities in such regions. Henceforth, tax default poses a principal concern for municipal corporations as they become financially incapable of meeting their annual objectives of regional development and growth. 

property tax

This instance of tax default has been categorically noticed in the Nagpur Municipal Corporation. As of February 2020, numerous major commercial bodies and individual property owners in Nagpur have defaulted on property tax to the tune of Rs.514 crores. In Nagpur, there are a total of 6.13 lakh properties – commercial and residential – of which 4.4 lakh property owners have defaulted on their property tax.

What action will property tax defaulters face in Nagpur?

Keeping in view of growing non-compliance among property owners in Nagpur, the NMC chief has issued strict orders to the property tax department concerning tax defaulters.

As per this order, the property tax department shall register criminal offences against anyone who does not pay their NMC property tax. Further, if such tax defaulters fail to comply, they shall be sent to jail. 

However, this measure by the Nagpur Municipal Corporation is not a sudden move meant to startle property owners. Instead, according to the civic body, it had issued multiple reminders to defaulters regarding their outstanding property tax or face strict action. 

The property tax department has characterised defaulters under 5 categories. These categories are based on the range of outstanding municipal tax of each property owner. 

These are mentioned below – 

Re.1 – Rs.4999 

There are 180,868 property owners from this category, and its cumulative outstanding tax stands at Rs.41.55 crore approximately. 

Rs.5000 – Rs.24999

Nearly 129,470 tax defaulters fall under this category, and outstanding property tax from this category is estimated at Rs.136.2 crore. 

Rs.25000 – Rs.49999

From this bracket, there are approximately 11,941 property owners who have cumulatively defaulted on Rs.40.17 crore as taxes.

Rs.50000 – Rs.99999 and Rs.1 lakh – Rs.4.99 lakh

In the former category, there are nearly 3531 property owners, whereas in the latter, there are approximately 1800 tax defaulters. Collectively, these two categories owe over Rs.58.9 crore to the Nagpur Municipal Corporation as property tax. 

Several activists have, however, protested against this action, noting that NMC should first target the larger tax defaulters and then come after individual property owners. Irrespective of such protests, the civic body has not yet responded. 

How is NMC property tax calculated?

The Nagpur Municipal Corporation property tax is computed via two separate calculations – annual letting value calculation and other taxes calculation. 

NMC employs the following parameters to realise annual letting value –

  • Property type,
  • Area of property in sq. metre,
  • Block of the property, 
  • Type of construction, 
  • Usage of property,
  • Age of property, 
  • Occupancy type.

Based on these values, NMC derives the annual letting value of a property. Other taxes comprise – 

  • General tax.
  • Sewerage tax.
  • Sewerage benefit tax.
  • Special clean-up tax. 
  • General water tax.
  • Water benefit tax.
  • Fire service tax.
  • Road tax.
  • Education tax (municipal corporation).
  • Tree tax.
  • Education cess (Maharashtra government).
  • EGS Cess.
  • Big residential building tax.

How to pay NMC tax?

Follow the steps mentioned below to pay house tax online – 

  1. 1. Visit the online portal of Nagpur Municipal Corporation 
  2. 2. Navigate to the dashboard and click on “Services”
  3. 3. Select “Property tax”
  4. 4. Click on “Pay property tax and generate receipt”
  5. 5. Provide “Index number.”

You can check the property tax bill online once you enter the index number of your property. Pay through available methods and generate a property tax receipt. Preserve the tax receipt carefully. It is a crucial document which you need to apply for a loan against property.

It is a high-value loan that you can utilise to mitigate significant expenses conveniently. However, it would help if you considered a few things before applying for a loan against property like the amount you require. 

Nevertheless, NMC property tax defaulters have to pay their dues to avoid a criminal charge. This can also come in the form of a prison sentence.