Bhubaneswar: The civic body will likely incur a revenue loss of at least Rs 30 crore this year in annual holding tax collection as it enforces Supreme Court directions against the commercial use of residential properties.However, officials remain optimistic that the shortfall can be offset by bringing thousands of unassessed buildings under the property tax net through the ongoing survey to identify new buildings for property tax purposes.In August, Bhubaneswar Municipal Corporation (BMC) had served notices to around 5,000 house owners across its three administrative zones after it was found that their residential premises were allegedly being used for commercial activities. The property owners have been asked to discontinue such commercial operations in compliance with SC guidelines, which aim to curb the misuse of residential buildings.BMC officials said the action will directly impact the civic body’s revenue collection because many of these properties were paying holding tax under the higher commercial category. Once commercial operations stop, the properties will be assessed and taxed under residential rates, resulting in a substantial reduction in tax receipts. “Since we are taking action against owners who have converted residential buildings for commercial purposes, we can no longer collect holding tax under the commercial slab. We can only collect it on a residential basis. The differential amount between residential and commercial tax slabs is considerably high. Hence, there could be a revenue loss,” BMC’s deputy commissioner Ajay Mohanty said.Holding tax remains one of the key revenue sources for the civic body. Educational institutions, govt establishments, commercial entities and residential property owners are required to pay the tax annually based on assessments conducted by the BMC.In the 2025-26 financial year, BMC had set a holding tax collection target of Rs 200 crore. However, it managed to collect only about Rs 120 crore, while another Rs 80 crore remained pending from defaulters. A significant boost came in March alone when the civic body collected Rs 53 crore through intensified recovery efforts.For the current 2026-27 financial year, BMC has retained the same target but officials fear collections could dip to around Rs 90 crore or even lower due to the shift of several properties from commercial to residential tax categories.To counter the expected loss, BMC has launched a survey aimed at identifying previously unassessed holdings. Officials believe increasing the number of assessed properties from the current 1.30 lakh to nearly 2 lakh could significantly boost revenue.“If we are able to assess new holdings and expand the tax base, the loss from commercial properties can be compensated. In that case, total holding tax revenue could again reach Rs 120 crore to Rs 130 crore by the end of the financial year,” Mohanty added.
