Pune Municipal Corporation to Consider Non-Resident Property Tax on Student Accommodations; Awaits Standing Committee Approval

Pune, 15th December 2023: In a bid to augment revenue and address the growing demands on Pune Municipal Corporation (PMC), a proposal has been presented to the Standing Committee suggesting the imposition of non-resident property tax on accommodations provided to students seeking higher education in the city. This move is aimed at regulating income generated from student housing, often offered on a cost basis in residential areas.

As per the proposal, areas with a higher concentration of educational institutes, including Kothrud, Viman Nagar, Katraj, Dhankawadi, and Central Peths, would be subject to commercial property tax. The intention is to ensure property owners pay more than double the current property tax, given the substantial income derived from providing accommodation to students.

The PMC aims to generate an income of Rs. 2200 crores from the Taxation and Tax Collection Department in the fiscal year 2023-24. As of December 15, Rs. 1701 crores have already been collected, and an additional Rs. 500 crore is targeted by the end of March. The proposal seeks to align property taxes with the increasing costs incurred by the PMC.

The proposal emphasizes the distinction between residential and non-residential use for accommodations provided to students. The intention is to levy non-residential tax on properties where students reside, shifting away from the current residential tax model. This move is supported by the argument that student accommodations, hostels, and paying guest arrangements are commercial and should be treated as such.

Ajit Deshmukh, Deputy Commissioner of the Taxation and Tax Collection Department, referred to rulings from the Lucknow and Bangalore Benches, stating that commercial tax should be applied in cases involving paying guests. The proposal asserts that there will be no exemption from Goods and Services Tax (GST) in such instances.

While approximately 50 per cent of property owners are currently paying non-resident tax, objections have been raised by some individuals. The policy adjustments are pending approval from the Standing Committee, and if accepted, they will contribute to the PMC’s efforts to diversify revenue sources and ensure financial sustainability.