Smarter Addressing imperative for better property taxation

The new-age systems like DDN can be much efficient and effective in the property tax surveys. Representational image

By Parikshith Reddy

A World Bank report ‘Property taxation in India’ in April 2020 identifies that while the average collection from property taxes in the OECD (Organisation for Economic Co-operation and Development) group is about 1.1 % of national gross domestic product, the number for India is mere 0.2%, which is just one-sixth compared to OECD. The biggest challenge for property taxation is the lack of accurate property tax rolls. Unique identifiers and clean addresses are critical for property tax roll management. The rapid growth of both rural and urban India has resulted in broken addressing systems. There is no singular format even within the same city or in most cases, there are no addresses (rural India).

Though many ULBs (Urban Local Bodies) have invested in technologies like GIS mapping, the challenge is in making this data dynamic and connected to growth on the ground. The cost-benefit of GIS is questionable since conducting these exercises in a periodic manner is both costly and time-consuming. Surprisingly, in conversation with many local bodies, it is evident that record keeping of properties is often patchy since most cities have dated or incomplete GIS records. One such large municipal body in the NCR estimates to have over 20lakh properties (estimated through utility bills), however, the number of properties paying taxes is only around 4lakh.

In one of the cities, the local authority estimated 1.6 lakh properties but post coding each address Alpha-Numerically, they identified over 3lakh properties, a difference by 100%. That was the first time a Government body realized the leaks in the existing address system.

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The situation in rural and smaller cities is even dire. As per a study commissioned by the World Bank (ICRA 2015), many issues such as low collection rates of 3% to 13% of total revenues, incomplete property rolls (25% to 30% of the properties are not registered), and a low collection (30% to 60% of the actual demand) is not being collected. Addresses and property identifiers exist in silos and municipal, electricity, water, census, postal, each of these departments have a different address format.

Addressing should be looked at as a currency that is transacted across multiple touchpoints in a user’s journey (Emergencies, Utilities, E-Commerce, SWM, BFSI, and a thousand more use cases). This multi-use nature enables residents and property owners to use their smart addresses frequently and creates a singular currency for transactions akin to a mobile number. This ecosystem of use cases and the ease of transaction ensure that people want to get registered smart addresses and this is the very process that will ensure continuous improvement in property roll data with new enrolments, mutations, etc.

The cost of GIS based property surveys is high and the cost-benefit is often questionable. The new-age systems like DDN can be much efficient and effective in the property tax surveys and enable updating property records at much lesser costs.

(Parikshith Reddy is co-founder of Zippr. The views express are his owns)

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