Around eight lakh tenants living in houses less than 500 square feet will now be brought under the capital value-based property tax net, according to the revised rules for property tax assessment passed by the Brihanmumbai Municipal Corporation (BMC) on Thursday.
The move will affect residents living in some of Mumbai’s oldest residential areas including the century-old Bombay Development Directorate (BDD) Chawls, Kalbadevi, Girgaum, Mohammed Ali Road, Bhuleshwar and other areas.
The tenants in these flats had been exempted from paying property tax under the new system for five years (between 2010 and 2015) when the BMC migrated from rateable value-based assessment of property tax to capital value-based assessment in 2010.
The rateable value is the notional rent earning capacity of a property, which kept property taxes in several south Mumbai areas artificially low as rents were frozen under the Rent Control law.
The residents, who have continued to pay property tax based on the rateable value of their properties since 2010, will now be charged as per the capital value of their property. The BMC is estimating an additional revenue of Rs 150 crore from the new segment.
A senior civic official from the assessment and collection department said, “When the rules were framed in 2010, it was decided that the tenants living in these buildings will be given an exemption from being assessed under the new system for five years. Therefore, in the revised rules we have included all the tenants under the tax bracket.”
According to estimates made under the revised rules, the tax collection from residential properties is projected to rise by Rs 155 crores to 1,475.22 crore,or 11.74 per cent more than the current year’s estimate of Rs 1,320 crore.
The revised rules, which were passed by the BJP-Sena ruling majority in the standing committee on Thursday, will come into effect from April 1, 2015.
The opposition walked out of the meeting stating that the proposal was tabled late even though the MMC (Mumbai Municipal Corporation) Act stipulates that any new tax to be imposed in the city be presented before March 20.