BMC collects 95 per cent of revenue target from property tax collection

During the financial year 2022-23, BMC overachieved its target by Rs 392 crore since it had been able to recover Rs 5,792 crore in property tax against its target of Rs 5,400 crore. To be sure, the Maha Vikas Aghadi (MVA) government in January 2022 had announced a tax waiver on properties smaller than 500-square-feet, for which the civic body had to forgo Rs 462 crore. Similarly in August 2022, the current Eknath Shinde-led state government deferred the property tax waiver for the third consecutive time, which may further lead to a shortfall of Rs 1,080 crore in revenue during the current financial year.

“The decision to implement the property tax hike may lead to a shortfall this year. If the hike would have been implemented, the entire collection would have surpassed Rs 7,000 crore. This is the reason why we had to revise the target in the middle of this year,” said a senior official.

In November 2022, the Supreme Court quashed BMC’s decision to levy a new law for imposing property tax in Mumbai. Earlier, BMC in 2009 modified the existing formula of tax collection under which it will be calculated on the basis of capital value of the property. This new rule came into force only in 2012, and a decision to revalue the property tax bills was taken by including the outstanding amount of the last two years in the 2012 Bill. Meanwhile, this decision was challenged in the Bombay High Court, which stated that tax cannot be levied with retro-effect, and that the capital value does not rely on the potential of construction and should be calculated on the basis of actual construction that has taken place in that plot. This decision was further challenged in the Supreme Court, which later upheld the HC decision and BMC in December 2022 filed a review petition in the SC on the issue.

“The HC decision was upheld by the SC, and this could cause the BMC an additional loss in the revenue of Rs 1,000 crore every year,” said the official.