According to the Deputy Chief Minister Sushil Kumar Modi new rules would soon be framed for simplifying the process of payment of holding tax in urban areas in Bihar.

He said system of tax collection by urban local bodies are not perfect, which leads to non-payment of holding tax. Even in Patna not more than half of the people make payment of holding tax for the lack of better system and tax realisation capacity.

Though the Patna Municipal Corporation had the capacity to realize holding tax to the tune of Rs 100-120 crore every year, the collection of holding tax was Rs 17 crore and Rs 20 crore in 2008-09 and 2009-10 respectively.

Serious shortage of manpower, gross irregularities by tax collectors and reluctance of the property owners to pay the dues are factors responsible for this problem.

According to the PMC budget the expected earnings through holding tax in 2011-12 is approximately Rs 66 crore, which includes the current and arrear house taxes, sewerage taxes, water taxes, health cess and education cess. However, the collection is usually less than 50 per cent of the target every year.
The state government is considering imposing commercial tax on the commercial establishments like coaching institutes, clinics etc, he said. The rate of holding tax would be different if land owners
leased their houses for rent.

It needs to be recalled that the tax structure has not been revised in Bihar since 1991. There are two lakh holdings in the PMC area. The same number of holdings are beyond tax limits because of the Corporation’s inaction. Now all houses will fall under this category.

According to sources PMC earns Rs 25 crore from holding taxes, Rs five crores from stamp duty and Rs 10 crore through water and other taxes every year.

If the PMC is facing such a problem the situation in the rest half a dozen municipal corporations of the state is no different.

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