In an effort to bolster revenue and meet the escalating demands on Pune Municipal Corporation (PMC), a proposal has been put forth to the Standing Committee, suggesting the imposition of non-resident property tax on accommodations provided to students pursuing higher education in the city. This strategic move aims to regulate income generated from student housing, particularly in residential areas.
The proposal targets areas with a higher density of educational institutions, such as Kothrud, Viman Nagar, Katraj, Dhankawadi, and Central Peths, where commercial property tax would be applicable. The objective is to ensure property owners contribute more than double the current property tax, reflecting the substantial income derived from offering student accommodations.
With a goal to generate an income of Rs. 2200 crores from the Taxation and Tax Collection Department in the fiscal year 2023-24, PMC has already collected Rs. 1701 crores as of December 15, with an additional Rs. 500 crore targeted by March. The proposal seeks to align property taxes with the rising costs incurred by the PMC.
Emphasizing the distinction between residential and non-residential use for student accommodations, the proposal advocates for levying non-residential tax on properties where students reside. This departure from the current residential tax model is supported by the argument that student accommodations, hostels, and paying guest arrangements are commercial entities and should be treated as such.
Ajit Deshmukh, Deputy Commissioner of the Taxation and Tax Collection Department, cites rulings from the Lucknow and Bangalore Benches, asserting that commercial tax should be applied in cases involving paying guests. The proposal further declares that there will be no exemption from Goods and Services Tax (GST) in such instances.
While approximately 50 per cent of property owners currently pay non-resident tax, objections have been raised by some individuals. Pending approval from the Standing Committee, these policy adjustments, if accepted, will contribute to PMC’s efforts to diversify revenue sources and ensure financial sustainability.
