BMC engages MU to conduct study on taxation in slums

The Brihanmumbai Municipal Corporation (BMC) has invited the economics department of Mumbai University (MU) to conduct a study on taxation in slum areas after rolling out the new property tax regime based on capital value in Mumbai this year.

Written by Alison Saldanha | Mumbai | Published: August 14, 2013 12:54 am

The Brihanmumbai Municipal Corporation (BMC) has invited the economics department of Mumbai University (MU) to conduct a study on taxation in slum areas after rolling out the new property tax regime based on capital value in Mumbai this year.

In addition to a thorough research of the slum areas and the probable methods of taxation,MU is expected to study the tax models for slums in other parts of the world and suggest a new system that can be incorporated in Mumbai. Revenue collection from slum areas,which constitutes over 60 per cent of Mumbai’s total population,is estimated to bring in roughly Rs 1,000 crores for the BMC.

“According to the law,the municipal body must collect tax from all structures in the city – be it legal or unauthorised. We have now asked the economics department of Mumbai University to conduct a study for us on how we can implement the new tax. They will respond to our invitation in the next 15 days. We need to know if they can do manage the full scope of work. For unauthorised constructions on originally authorised buildings,we have asked former BMC official S Agarkar from the assessment and collection department,to form a taxation plan,” said additional municipal commissioner Rajeev Jalota.

While developing the taxation model,MU will not only have to see how taxes can be implemented based on regular factors such as the ready reckoner rate and plot size but will also have to consider other aspects such as the quality of civic amenities available for residents of slum areas. “This includes evaluating the drainage system available,the road condition,and the water connections that every household has access to. Based on these facilities MU will suggest a tax policy which will be further discussed and finalised following due process in the BMC,” Jalota said.

It will be researched how the collection will be carried out. “Manual collection would need more than 1,000 persons and the BMC cannot spare such manpower. We will either have to appoint a collection agency or look for other means of collection such as through phone bills,” a senior official in the assessment and collection department said. He added that the corporation is also looking at possibilities of linking the tax model to the Aadhar Card system and individual bank accounts.

The study,and later implementation of the finalised tax policy for unauthorised structures will take another year. “Six months to carry out the study and another six months to form the policy for implementation based on the findings. Despite the debates that are bound to crop up,slum people may welcome this move as it brings legitimacy to their residence. Unlike water tax which is billed to a group,property tax is for every household,” said Jalota. The arrears on property tax for slum properties is likely to be waived off,he added.

“It may be too much of a burden for the poor. We are considering collecting the tax monthly to ease the pressure of the annual amount- it will be a considerably lesser to handle every month,” Jalota said.

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