Nagpur: Most of us may have been proudly wondering about Nagpur Metro and cannot wait enough to catch the fancy rail ride within the city but hold on!!! Get ready to empty your pockets first! No, we are not talking about proposed metro tariff but additional burden you would be loaded with, in the form of taxes, just to speed up your dreams to reality!
Nagpur Metro Rail Corporation Ltd (NMRCL) has not only sought to increase stamp duty on property transactions by 1%, it also looks forward to impose 10% surcharge on property tax charged by Nagpur Municipal Corporation (NMC). Additionally it also wants to levy a 10% tax on premium of balcony, passage or stairs.
Informed sources said proposals in this regard will be sent for approval to the ministry of urban development.
A Giant Budget
The cost of the metro rail project as on date is 8,680 crore of which 50% or around 4,340 crore will be a loan from German and French government agencies. German agency KfW has already cleared a 3,500 crore loan in principle. These loans have to be repaid over a period of 20 years. The money generated through these taxes will be used to pay the loans and meet the operational cost of the metro.
The Delhi Metro Formula
As per the detailed project report (DPR) prepared by Delhi Metro Rail Corporation (DMRC), the property tax surcharge will generate over 3,500 crore over a period of 27 years. The tax is to be levied from the year 2016-17 and will continue up to 2042-43. A NMRCL official said that the surcharge has to be levied on the annual letting value (ALV). Other taxes, like lighting tax, fire service tax and sewerage tax, etc are also some percentage of ALV. “This tax has to levied on all properties and land holdings within Nagpur Municipal Corporation (NMC) limits and not only in the 500 metre metro corridor area,” he said. In calculating the revenue from surcharge, DMRC had made an assumption that ALV increases by 35% after every five years. NMC had told DMRC officials that reassessment of property tax was done every five years. The collection in 2016-17 is assumed to be 13 crore. In reaching the revenue figure of 1,422 crore from 10% tax on premium on balcony, passage or stairs, DMRC has considered an annual increase of 10% in the premium. In 2016-17, DMRC expects a revenue collection of 5 crore from this.
The consultant has estimated that NMRCL would earn 10,316 crore through 1% surcharge on property transactions in the city. Here too it is assumed that the annual increase in property transaction value at the rate of 10%. DMRC expects revenue of Rs 85 crore in 2016-17 from this surcharge. Nagpur Improvement Trust (NIT) had collected 32 crore in 2013-14 from 0.5% surcharge on stamp duty.
The total collection in 27 years from these three taxes is expected to be around 15,240 crore. Other than this, NMRCL will also earn from 40% premium on extra floor to space index (FSI) allowed by urban development department (UDD) on plots within 500 metre on both sides of metro rail corridor. All these calculations have been made assuming that large number of people will take advantage of extra FSI granted by government and start living along the metro corridor.