Recommendation of 13th Finance Commission

Worthwhile to mention that ultimately the Board got the recognition for its assiduous effort to work with a mission towards sustainable result in its area of activities despite the lack of proper infrastructure for the state level agency. The recognition came from the 13th Finance Commission (13th FC), The Commission placed its report before the Parliament on Feb, 2010 by Hon'ble Finance Minister, Government of India.

As per recommendation of the Commission all the State Governments were requested to put in place a state level Valuation Board or Property Tax Board in the line of West Bengal. The 13th FC expressed concern over the inability of the urban local bodies to fully exploit the property tax potential. Based in study on 36 cities, the Commission noted wide inter - city variations in the collection of property tax.

Commission noted that there is tremendous scope for improvement in revenue sector from the property tax without increasing the rates and without any structural alteration of the basis of levy and by following a standardize methodology for determination of property tax.

The Commission examined the performance of organization viz Municipal Property Assessment Corporation, Ontario, Canada and West Bengal Valuation Board, India, which assist the municipalities in the assessment, and valuation of properties for the levy of property tax. The Board will assist the ULB to put in place an independent and transparent procedure for assessing the property tax.

The 13th FC recommended for the establishment of a state level Property tax Board “on the lines of West Bengal Valuation Board", to standardize property valuation in the State.

It may be also mentioned that West Bengal is the only state where state level Board has been constituted in the year 1980 after enacting the West Bengal Central Valuation Board Act,1978.

The detail Report of the Commission may be obtained from the official Web Site of 13th Finance Commission and from the web site of Administrative Staff Collage of India.

Excerpts from the Observation of the 13th Finance Commission:

"How best to exploit this potential:

States should establish a Central Valuation Board on the lines of the West Bengal Valuation Board in order to standardize property assessment and valuation. Property values should be indexed and guidance values used.

"10.90 A parallel effort in India is the West Bengal Valuation Board. This Board, set up on the basis of the West Bengal Valuation Board Act, 1978, seeks to bring about a uniform and rational system of valuation of municipal properties throughout the state excluding the Kolkata Municipal Corporation limits. The primary function of the Board is to enumerate and assess the value of properties in all the municipalities in the state. It has adopted a transparent approach to its functioning and has made available publicly the procedure it adopts for valuation of property. It has undertaken survey work in 117 ULBs and published 217 valuation lists till 2007-08. The Board has faced a number of teething problems since its inception, including resource and capacity constraints, thus constraining its service delivery".

Summary Recommendation:

State Government must put in place a state level property Tax Board, which will assist all municipalities and municipal corporation in the state to put in place an independent and transparent procedure for assessing property tax. The Board (a) shall, or cause to, enumerate all properties within the jurisdiction of the municipalities and corporations; (b) shall review the present property tax system and make suggestions for a suitable basis for assessment and valuation of properties; and (c) shall make recommendations on modalities for periodic revisions. The findings, suggestions and recommendations of the Board will be communicated to the respective urban local bodies for necessary action. The exact model to be adopted is left to the respective state. The Board should be staffed and equipped in such a manner as to be able to make recommendation relating to at least 25 per cent of the aggregate number of estimated properties across all municipal corporations and municipalities in the State by 31st March, 2015. The Board should prepare a work plan indicating how to propose to achieve this coverage target and the human and financial resources it proposes to deploy. Passage of the relevant legislation or issue of the necessary executive instructions by the State Government for creation of the Property Tax Board as well as publication of the work plan by the Board in the State Government Gazette will demonstrate compliance with this condition".