Luxury tax on buildings to be renamed as ‘additional tax’

Thiruvananthapuram: The Kerala Cabinet has decided to rename the luxury tax imposed on buildings as ‘additional tax.’ The move is based on legal advice which said that the term ‘luxury tax’ violated the Central rules in this regard.

The luxury tax and one-time tax are imposed on buildings based on their floor area. All buildings having an area of over 3,000 square feet (278.7 square metres) will be charged an additional (luxury) tax from Rs 5,000 to 12,500 in four slabs, as earlier.

Meanwhile, the building tax imposed by the Revenue Department would be based on the plinth area according to the plans approved by the local bodies. Revenue officials will no longer visit buildings and take measurements as assessing authorities to decide tax. This would avoid delay in tax assessment as the building details could be collected from the local bodies itself.

The Cabinet decided to bring these amendments in the Kerala Building Tax Act, 1973 considering the situation where the government was losing huge tax revenue as thousands of domestic and commercial buildings remain without being assessed for property tax in the state.

Tax on flats
Ownership will be the criterion for assessment of building tax of flats/apartments. The amendment is proposed as the current method has been causing much confusion.

If different flats in an apartment complex are owned by a single person, the tax will be decided separately. However, if these flats are connected, the tax will be assessed together. This would increase the plinth area, inviting additional tax.

Revision
Under existing rules, the Collector has no powers for revision more than three months after the assessing authority decides the tax for a building. An amendment is now proposed to extend this period to one year.

Penalty
A person providing wrong information on his building could be found guilty under Section 177 of the Indian Penal Code, as per the current law. This provision will be abolished under the proposed amendment and, instead, a fine of 50-percent of the actual tax amount will be imposed. Under the old law, the maximum fine was Rs 1,000, which would go up after the amendment.