At the BMC’s standing committee meeting on Wednesday, corporators rejected the administration’s new formula for property tax calculation while criticising it for failing to relieve the burden on property owners of the city.
After the civic body changed the property tax system from rent value to capital value in 2010, the new formula for calculating tax was set as built-up area (BUA) x Ready Reckoner Rate (RRR) of the property. This formula has been used to collect taxes since 2013 with arrears dating back to 2010.
While the corporation claims the new system brought parity in tax payments across Mumbai, property owners complain of glitches and lack of transparency in calculation and collection. Subsequently, several petitions filed in the Bombay High Court challenging the new system stated that the civic body was wrongly calculating and collecting property tax on BUA instead of the carpet area (CA) as was the previous practice as per the provisions of the Mumbai Municipal Corporation Act, 1888.
“It was our mistake to base the formula on BUA instead of carpet area. However, the problem now is that the civic body faces a revenue loss of 20 per cent if property tax is calculated by CA and multiplied by RRR alone,” said additional municipal commissioner Rajeev Jalota, who is in charge of the assessment and collection department.
Following an HC order on the matter that asked the to rectify the problem by July 4, 2014, the civic body has now proposed a new formula for calculating tax — “Carpet Area x RRR x 1.2%”.
Jalota said, “The anticipated loss of revenue can be offset if we multiply this by 1.2 per cent uniformly for all properties across Mumbai while still abiding by the provisions of the MMC Act. This is the most suitable solution.”
However, corporators say the additional 1.2 per cent charge on the property tax calculation was unnecessary.
“While the HC is trying to help people by reducing the charges, the BMC is doing nothing but changing an equation, so there are no revenue losses. This is the richest corporation. It should help people and not burden them more,” said Rais Shaikh, leader of the Samajwadi Party in the BMC.
BJP group leader Manoj Kotak said, “Are we going to pay back citizens for the mistakes that the civic body has been committing?”
Congress corporator Asif Zakaria said the BMC was a government organization, and not a private company.