Two days after putting basements used exclusively for parking in group housing complexes out of the property tax ambit, the Municipal Corporation of Gurugram (MCG) has decided to extend the exemption to private hospitals, malls, hotels, private office complexes and marriage banquets that provide parking facility at their basements for ‘free’.
After assessing central governments notifications on property tax for commercial spaces, MCG officials concluded that areas which are not using parking for deriving commercial interests shall also be exempted from property tax.
According to the MCG officials, in paragraph 2(B) under clause (b) of the notification issued by the central government on property tax on October 11, 2013, titled “Commercial Space”, there is no mention of whether basements exclusively used for free parking would be assessed or exempted from property tax. Therefore, in the absence of any specific mention, tax officials had included basements in commercial spaces as part of their property tax assessment.
However, based on directions by MCG Commissioner V Umashankar, the said notification and its outlines were assessed by taxation officials.
It is learnt that officials concluded that the word used in the notification for the basis of levy of property tax on commercial spaces is “carpet area”. Carpet area refers to net usable area but excludes certain common facilities such as basements. In addition, they also concluded that since over-ground parking is not assessed under property tax charge, basements should also be excluded.
“Rational considerations lend weight to the assertion that on-ground parking facilities are not assessed for property tax but basements used for free parking are. Therefore, officials decided to exempt the same for the levy of property tax,” SS Rohilla, spokesperson of MCG said.
MCG officials also confirmed that they have written to the state government seeking clarity on whether basements of commercial spaces which have pay-for-use facility should be exempted from property tax since on-ground parking facilities do not fall under the purview of property tax levy.
MCG officials also said that assessment, billing and adjustments of property tax for “free” parking commercial spaces will be carried out in the next financial cycle (2017-18).