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Monday, October 19, 2020

Mumbai: BMC proposes one year waiver on increase in property tax rates

If approved at general body meeting, will benefit over 2.83 lakh property owners

Written by Laxman Singh | Mumbai | September 20, 2020 1:09:29 pm
Mumbai: BMC proposes one year waiver on increase in property tax ratesThe BMC has proposed a complete waiver in the increase of property tax rates for one year. (File photo)

IN WHAT may bring relief to lakhs, the BMC has proposed a complete waiver in the increase of property tax rates for one year. The civic body’s proposal comes at a time when Mumbai is in the thick of the Covid-19 pandemic that has had severe implications on the city’s economy over the past six months after a countrywide lockdown was imposed.

The BMC’s move, if approved at a general body meeting, will benefit over 2.83 lakh property owners, who could face increased property tax rates of up to 40 per cent. Officials, however, did not reveal the revenue loss that the move would cause to the civic body. In Mumbai, there are 4.2 lakh property owners, of which 1.37 lakh have houses of area up to 500 sq ft eligible for a complete property tax waiver.

Last revision in property tax rates happened in 2015 for five years. According to the amendment in the Mumbai Municipal Corporation Act, the revision in the assessment of property tax is for a period of every five years and this can be done at the end of the five-year term. The fresh revision was scheduled for 2020-2025.

Joint Municipal Commissioner (Assessment) Sunil Dhamne said there was a proposal to waive off the increase for a year, but he refused to share further details as it was still under consideration.

Officials from the BMC said it would be discussed with group leaders and the final approval was to be taken at the general body meeting.

Earlier, Congress corporator Asif Zakaria wrote a letter to Municipal Commissioner I S Chahal demanding that the proposed periodic revision of tax rates that allows the corporation to increase rates up to 40 per cent should be waived off. He had said Covid-19 and lockdown had adversely affected businesses, and that increase in rates would put a lot of pressure on people, already facing financial strain.

In Mumbai, property tax calculation is based on capital value of property on the basis of ready reckoner (RR) rates.

The RR is multiplied with various factors like year of construction, floor, carpet area, nature of construction, ward to determine capital value of the property, among others.

For the corporation, property tax is one of the biggest income sources (24 per cent) after Octroi compensation. Collection has, however, faced a dip since 2016-17. The BMC had never achieved its target since then. For year 2018-19, the target was Rs 5,206 crore, but it collected Rs 5,082 crore and for 2019-20 it was Rs 5,600 crore but the collection was only Rs 4,100 crore. The BMC had set a target of Rs 6,788.58 crore for property tax collection for 2020-21.

It is, however, unlikely to meet its target this time as the BMC was already facing a shortfall in tax collection in the last five months.

“We had also planned to recover at least 5 per cent of dues pending with many property tax defaulters, which was around Rs 15,000 crore. But Covid-19 has changed everything, “said an official from Assessment and Collector department.

The BMC is yet to get a clarification from the state government over complete waiver of property tax for houses up to 500 square feet. Last year, the state government had issued a notification on providing the waiver, but the components of taxes that could be waived stay undecided.

While the state government said the waiver will be on general tax, which amounts to only about 20 per cent. ”There are eight other components like sewerage tax, water tax, education cess, tress cess. There is no clarity on these components and whether they should also be waived off or not?” an official said.

With the waiver for houses of 500 sq ft, the civic body is expected to be set back by Rs 335 crore in revenue loss.

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