People living close to Metro may end up paying more tax

People living close to Metro may end up paying more tax

People living close to Metro corridors in the country could soon end up paying more tax with the Centre asking state governments to explore the option of imposing dedicated tax as part of innovative methods to finance such modern transport projects.

The Union Urban Development Ministry has written letters to state governments seeking their opinion on levying additional taxes on land transactions near the Metro corridors and a few states like Tamil Nadu and Andhra have replied in the positive.

"Metro is a very costly system...The difficult part is to meet the expenses and many more cities in the country are coming up with Metro projects. As a result of this, we have to go for innovative sources of revenue generation and one is the levying of taxes," Urban Development Secretary Sudhira Krishna told reporters here.

He said the proposal states that the levy 10 per cent may also be imposed on additional floor area ratio (FAR) permitted along the Metro stretches.

Seventy-five per cent of the funds raised through such taxes would go to the Centre's dedicated urban transport fund which could be used for further extension of projects.

Since tax is a state government subject, they are free to decided the percentage, Krishna said, adding that it was just a proposal and no decision has been taken by the Centre.

If the proposal sees the light of the day, it would be implemented in Delhi along the Metro corridors as it is one of the few cities which has Metro transport system.

The Secretary dismissed suggestions that people living near-by Metro corridors are being "penalised" for choosing their residence there, saying the gainers should participate in further development of the project.

"It is not a startling increase. The tax would be a nominal amount and it is inevitable. Because, the Delhi Metro has to repay its loan amount," he said.

Krishna said the Centre got the idea of writing to the state after Karnataka government launched an infrastructure tax by imposing cess on certain items.

He said he has asked the Delhi Metro to work out a similar proposition like the Bangalore Metro for launching tax-free 'Metro' bonds to raise funds for further expansion.

"The Bangalore Metro has proposed Metro bonds. I have advised the Delhi Metro also to work out a similar proposition for mobilising resources," he said.

The tax-free bonds would reduce the "external borrowing" factor of the Delhi Metro and will help in using the resources that are available internally.

"External borrowings are not always good. Unlimited and excessive external borrowings are not good. When resources are available internally they should be used," he said.

Krishna said the proposal had already reached the Finance Ministry and expressed the hope that it would be cleared soon.

He also said the Delhi Metro has been asked to submit a draft Unified Metropolitan Transport Authority (UMTA) Bill from user agency perspective within four weeks.

The organisation has already started the work of drafting the proposed bill, he said.

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