Tax on vacant plots to help urban poor

NEW DELHI: You may soon have to pay tax on your vacant plot of land if your intention is to hold on to it to sell at a higher price later. The Centre is considering a tax on unused urban land to finance a "national fund for urban poor" to ensure that basic services — shelter, water, sanitation and health facilities — reach the poorest. Government sources pointed out that the tax would be paid by individuals, institutions and builders who are allotted land by a government agency but keep it vacant instead of using it for the stated purpose. The proposed tax will be calculated at the prevailing market rate. To bring in more money, the government also proposes to give tax exemptions to contributors. Besides helping finance projects for the poor, the tax is intended to deter speculation by builders and developers who exploit the scarcity of land in cities and towns. Sources pointed out that the corpus, called Basic Services to Urban Poor Fund, will have an initial input of around Rs 5,000 crore and will also get a grant from the Centre. According to the proposal moved by the housing and urban poverty alleviation ministry, the non-lapsable fund will be set up at national, state and city levels. The purpose of the revolving fund, being pushed vigorously by minister of state for housing and urban poverty alleviation, Kumari Selja, is to finance the integrated development of slums through projects for providing shelter, basic services and other related civic amenities. The government proposal also suggests that civic agencies spend 25% of their budget in areas dominated by the urban poor if they want to avail of Central assistance from the revolving fund. A similar rider will apply to civic agencies funded by Jawaharlal Nehru Urban Renewal Mission. Poor constitute a major chunk of the urban population. According to the government's estimates, in Mumbai, slum-dwellers constitute 54.1% of the city's population. The figure for Delhi is 18.7%. The proportion increases in smaller towns. In Faridabad near New Delhi, 46.5% of the total population lives in slums while in Meerut the figure is 44.1%. In Kolkata, 32.5% of the total population lives in slums, while they account for 18.9% of Chennai's population. The figure for Hyderabad is 17.2%. Selja had some time ago written to Prime Minister Manmohan Singh for setting up the dedicated fund. Subsequently, finance minister P Chidambaram asked the ministry to come out with the concept note on the proposal. The move is part of the housing and urban poverty alleviation ministry's proposal to provide 100% access to basic services for urban poor within the Mission Period 2005-12. The ministry has also introduced an innovative concept of P-Budget (Budget for the Poor). Under this, municipalities will have to allocate funds for schemes especially focused on weaker sections of society according to the proportion of their population in a city, said a senior official.
source:TOI