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Factual mistake in the formula adopted for calculation of Urban Development (U.D.) Tax by Rajasthan State Government – Is it a blunder or a well thought out strategy to rob our pockets?

Is it believable that a state government is levying Urban Development Tax on the basis of a formula, which has a flaw in following the basic principle of mathematics? Indeed, one can counter by saying that manual and system errors are bound to occur at every place. However, what would be the justification for continuing this error for, as long as, 9 to 10 years, and still going, on and on, with the same mistake?

It is interesting to note here that although the government changed during this period, still, the formula is intact i.e. the present government intends to continue the “revenue generating mistake”. Herewith, please be noted that the Rajasthan government is fully aware of this mistake, but I guess, they simply don’t want to rectify it, solely because it will lead to a lesser collection of tax. This certainly compels us to think, whether it is a blunder or a well thought out strategy to rob our pockets?

Before we discuss any further, let us check the formula adopted for calculating U.D. Tax in Rajasthan state. Formula for calculating the Urban Development (U.D.) Tax in Rajasthan

Total U.D. Tax Payable =

(Total Plot size in square yard) X (Effective D.L.C. rate in square meter)

2000

As it is evident from above, that the formula adopted for calculating the Urban Development (U.D.) Tax by the Rajasthan Government is factually incorrect. This mistake is apparent from the Urban Development Tax bills issued by the concerned department of Rajasthan Government. The factual mistake in the formula for calculation of U.D. Tax is that the plot size is taken in the square yard, while the D.L.C. rate is taken in the square meter. It is a basic principle of mathematics that two different measures cannot be multiplied to arrive at the desired figure. How can square yard be multiplied with the square meter? I mean, even a school going kid can point out such a mathematical mistake. However, the learned and respected Rajasthan Government leaders/officials are least bothered about this basic principle of mathematics. But, on the contrary, who cares for the basic principles, when keeping them aside, gives one the licence to rob the hard earned money of common men?

For the correct calculation of U.D. Tax, the total plot size first needs to be converted into square meter from the square yard and, thereafter, multiplied by the available D.L.C. rate in square meter, in order to obtain the correct Tax Payable per square meter.

“No wonder Logic’s are only for the common man to follow, the powerful and privileged ones are respectfully exempted”. I am not making a loose statement when I say that the Rajasthan Government doesn’t intend to rectify this mistake. My statement is very well backed by the fact that the Rajasthan Department of Local Self Government (RAJDLSG) had issued an order, by way of a departmental circular, dated 19th December 2012, instructing the concerned officials and departments, that while calculating the Urban Development Tax, square yard should be converted into square meter for arriving at the correct Urban Development Tax Payable (thereby accepting their mistake). However, surprisingly on dated 07th February 2013, RAJDLSG stayed the above-mentioned order with immediate effect i.e. switched back onto the wrong formula for calculation of U.D. Tax. (Reference: An article published, on dated 20th May 2014, in Dainik Bhaskar, the Daily Hindi Newspaper).

I hope the staying of the above-mentioned order in itself shows whether the government intends to rectify the mistake or not. What was the logic behind staying the order? The only reason is a reduction in tax collection on account of correct formula. Wow what a logical reason, right? If the government intends to earn more revenue than can’t they increase the tax rates? Or are the leaders scared of losing their government on account of increased taxes, so they rather choose to rob our pockets by misleading the innocent citizens? As per an article published, on dated 19th May 2014, in Dainik Bhaskar, the Daily Hindi Newspaper, Rajasthan Government is charging almost 20% excess Urban Development Tax on account of incorrect formula being adopted while calculating the U.D. Tax.

If the Rajasthan Government doesn’t intend to rectify the mistakes apparent on record then how come they expect us to deposit misleading taxes on time? When intentionally the government doesn’t want to rectify their mistakes, then who gave them the authority to levy penalties on incorrect taxes that are not being paid by the awaken citizens, till the time they rectify the mistakes at their end? Although, the concerned officials have been requested, time and again, for rectifying the mistake and issuing a revised demand notice, still no action has been taken till date, even after a lot of follow ups and meetings with the concerned officials. In such a case, why would any law abiding citizen pay the “intentionally incorrect taxes” to the government?

Finally, I would like to end this blog with the hope that the leaders and officials of Rajasthan Government get good sense, as well as, get awakened on the issue raised in this blog to rectify the mistake in the formula for calculating the U.D. Tax and they don’t take shelter of such illegal methods to collect revenue in future.

Peyush Jain