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More delay likely for new property tax system

A year after the state legislature passed a Bill to allow the Brihanmumbai Municipal Corporation to impose property tax based on the capital value of properties...

Written by Sharvari Patwa | Mumbai | April 1, 2010 11:51:18 pm

A year after the state legislature passed a Bill to allow the Brihanmumbai Municipal Corporation to impose property tax based on the capital value of properties,the civic administration has admitted that it will take many more months to implement the new system.  

According to a senior official in the Assessment Department,the delay in acquiring the Geographical Information System (GIS) for mapping the city’s properties is a key reason. The GIS involves usage of images captured by the QuickBird satellite imaging system to map properties along with details,including their carpet area. Chief assessor and collector NA Pathan said a physical survey of properties would now have to be conducted instead. The BMC has floated a tender for a physical survey and measurement of 17.5 lakh structures,each one including an approximate 10 units. The survey and a measurement of the area of all these properties will take the better part of six months.

Last June,the BMC had dispatched letters to more than 1.75 lakh property owners,seeking information regarding their property including the area,user,type of construction and age,but received only a negligible response.

Also,Pathan said an advisory committee appointed by the standing committee of the BMC to map out the road ahead on the matter had been given six months to frame the Business Rules that will govern the implementation of the new system. The next step would then involve inviting suggestions and objections from the public,a statutory requirement that will be done over 90 days. Effectively,this means that the new tax system can only be introduced by April 2011. The introduction of the capital value-based system will finally see Mumbai switching from the rateable value-based computation of property tax,under which tax is calculated on the basis of the rent-earning capacity of a property. With rents being frozen at 1940-levels in parts of the city owing to rent control,the new system is seen as a major reform that will rationalise property tax collections: South Mumbai,protected by the Rent Control Act,will now have to pay more. Under the new system,tax will be based on the market rates of property,as fixed by the stamp duty ready reckoner. Since suburban rents were not under rent control,suburban properties have traditionally paid much higher taxes though properties in South Mumbai command higher values.

While the standing committee on Wednesday asked for a final status report on the issue within a fortnight,officials said property tax bills to be generated in April 2010 will be computed under the old system. No decision has been taken yet on whether the new system,when implemented,will be applied with retrospective effect from the coming financial year,starting Thursday.

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