J&K Politics: Ahead of Polls, Property Tax Row Puts BJP in a Tough Spot in UT

Protests and public anger are against the rule-by-decree which the Union government has made a running theme in J&K.

Image: Aroop Mishra/The Quint

The Jammu and Kashmir administration’s decision to impose Property Tax – previously non-applicable due to Article 370 across the Union territory, has ignited a firestorm of public anger, with the local BJP unit meekly demurring over the issue as the elections loom near. 

All major political parties have come out strongly against the latest measure, calling it a “financial burden” on the people already ravaged by the economic downturn.

They contend that while they are not arguing about the merits (or lack thereof) of the Property Tax, their principal outrage is against the rule-by-decree which the Union government has now made a running theme when it comes to affairs of J&K.

• Political parties call Property Tax a “financial burden” on the people already ravaged by the economic downturn.

• The tax wasn’t previously mandated for J&K owing to the Special Status enshrined under Article 370 which was abolished in August 2019.

• The imposition of Property Tax runs contrary to the goals enunciated by the government which is expecting to raise 150 crores of annual revenue from Property Taxes.

• Experts say if the government wanted to lure investors towards the real-estate sector in J&K, it cannot impose taxes which generally discourage investment.

The Levying of a New Tax

Earlier this week, J&K’s gubernatorial administration decided to levy property tax within the territorial limits of urban local bodies across the UT.

The tax wasn’t previously mandated for J&K owing to the Special Status enshrined under Article 370 which was abolished in August 2019. Since then, around 900 Central laws have become enforceable in the erstwhile state.

A notification issued by the Principal Secretary Housing and Urban Development Department H Rajesh Prasad, said these rules will come into effect from 1 April this year. “This has been done in exercise of the powers conferred by Section 71A of the Jammu and Kashmir Municipal Act, 2000, read with Sub-Section 1 of Section 65 and Sub-Section 1 of Section 73,” the notification reads.

The decks for its imposition were cleared in October 2020 but its enforcement was clouded by the threat of political opposition and appears to have been delayed until now.

Property Tax Dates Back to 2020 Order

The new arithmetic outlined by the J&K administration defines property tax as 5 percent of the Taxable Annual Value (TAV) of a residential property and 6 percent for non-residential ones.

TAV is going to vary from place to place as it will be determined by a range of factors including floor, area, age of property, land value as notified by the government, type of municipality etc. The residential houses with an area of up to 1000 sqft are waived off from paying any.

The J&K government has also rolled out concessions (10 percent rebate) for those who submit the tax early. The taxes can be paid yearly and in two installments. And as for those who don’t, the notification stipulates penalties.

It notes that in event or failure to pay the Property Tax, the individual would be slapped with the liabilities of Rs 100 per month or one percent of the tax due, whichever is higher. But the overall penalty is not going to exceed Rs 1000.

“This new Property Tax policy will help municipal bodies generate revenue for better municipal services with minimum tax implications to residents,” Prasad said recently. “Better municipal services are expected to attract more investment and encourage more people to set up businesses in Jammu and Kashmir.”

Tax Enforcement Contradicts Government Claims

Experts who spoke to The Quint say that the imposition of Property Tax runs contrary to the goals enunciated by the government.

“Previously, J&K was not entitled to certain central funds which the Union government gave to municipalities across the country precisely because we weren’t levying Property Tax,” said Ejaz Ayoub, an Economic Researcher at the National Institute of Technology (NIT), Srinagar. 

That is just one side of the story, Ayoub adds. “The other side of the story is that Property Tax also wasn’t there since 1947,” he said. “So what compulsion was there to impose it at the time when unemployment is very high, inflation is soaring, and the economy slowing down?”

Ayoub said that if the government wanted to lure investors towards the real-estate sector in J&K, it cannot impose taxes which generally discourage investment.

It has become a leitmotif of the present administration in J&K to boast lofty investment proposals for J&K.

“In the Amrit Kaal, we have resolved to accelerate and broaden the developmental process in agriculture and allied sectors. Private investment proposals worth ₹66,000 crore have been received within a period of around one year during which 1,455 industrial units started their operations. This is, by far, the biggest industrial campaign in the history of J&K in a year,” J&K's Lt Governor Manoj Sinha said last month.

But the economics, said Ayoub, dictates that taxes tend to spook investors. “Urban localities in J&K are very primitive and are in need of investments,” he said.

The J&K government is expecting to raise 150 crores of annual revenue from Property Taxes. “The last annual budget for J&K was Rs 1 lakh 90 thousand crores. 150 crores constitute peanuts before that and for this sum they are angering a larger majority of the population. Why not delay it until the economic situation stabilises?” Ayoub asked.

Political Fallout Over the Decision

The enforcement of the Property Tax has also morphed into a new political slugfest in J&K, with all senior leaders such as Omar Abdullah, Mehbooba Mufti, Sajad Lone and Altaf Bukhari registering their objections over the decision.  

“These decisions have to be taken by an elected government,” said Raja Muzaffar Bhat, prominent rights campaigner and RTI activist. “They are major policy matters and cannot be decided by the bureaucrats. We have elected formations like the urban local bodies, municipal councils, corporations; have their consent been sought? The government doesn’t just mean the President and the Prime Minister; it also means all Panchayati Raj Institutions.”

All mayors, deputy mayors of municipal corporations in Srinagar and Jammu have also voiced opposition towards the move. 

More protests in Jammu than in Kashmir

And ironically, more than Kashmir, it is in Jammu where the decision has met the most vehement kind of furore. Analysts said that the very vocal opposition in the Jammu region was symbolic of anger over the prolonged absence of a democratic government.

“Property Tax is not illegal per se,” said Zafar Choudhary, Senior Editor and Author from Jammu. “In 2013, it was properly legislated and brought as a law during the Omar Abdullah government but was put on the backburner on account of lack of adequate household surveys.”

Choudhary said the Property Tax wasn’t very burdensome actually. “Yet there’s so much public anger over it. The reason is that people feel completely alienated from the power structures,” he said.

Jammu had originally supported the repealing of Article 370 and expected the locus of power to shift to their side, Choudhary adds. “But far from having a greater share in decision-making, they are finding themselves ignored. So their anger is roused by every small issue. This is going to affect BJP’s electoral prospects very adversely,” he said. 

(Shakir Mir is an independent journalist. He has also written for The Wire.in, Article 14, Caravan, Firstpost, The Times of India, and more. He tweets at @shakirmir. This is an opinion piece and the views expressed are the author’s own. The Quint neither endorses nor is responsible for them.)