Slums to pay property tax, but not based on land values

BMC to charge between Rs 2,400 and Rs 18,000 annually, depending on size of units.

Written by Vishwas Waghmode | Mumbai | Published: January 13, 2016 1:53:35 am
BMC, property tax, mumbai slum, mumbai slum property tax, BMC, mumbai news According to the civic body’s plan, slum owners will have to pay between Rs 2,400 and Rs 18,000 as property tax annually, depending on the size and type of huts.

THE Brihanmumbai Municipal Corporation (BMC), preparing to levy property tax on slum properties in the city for the first time ever from April this year, has decided not to tax such settlements under the capital value-based assessment system. Instead, a lumpsum amount will be charged annually.

According to the civic body’s plan, slum owners will have to pay between Rs 2,400 and Rs 18,000 as property tax annually, depending on the size and type of huts.

At present, the civic body does not levy property tax on slums. Till 2006-07, the civic body used to collect a ‘service charge’ of Rs 100 for residential and Rs 250 for non-residential structures.

Officials from the BMC’s assessor and collector department said the civic body would now levy property tax on slums built both on government and private lands. “It doesn’t mean the slums will be regularised. We are taxing them for whatever civic amenities they are getting. It doesn’t matter whether they are on government land or private land. We will tax all protected and unprotected slum properties,” said a senior civic official, referring to shanties built before and after the ‘cut-off date’ of January 1, 2000 prior for regularisation..

According to the BMC, there are approximately 15 lakh slum structures in Mumbai. Under the Jawaharlal Nehru National Urban Renewal Mission, it was mandatory to levy property tax on every structure in the city.

“It is not feasible to levy property tax on slums as per the capital value-based system, which operates based on Ready Reckoner rates. If we go by Ready Reckoner rates for various areas, slums would have to pay exorbitant property tax. So we have proposed to levy a lump sum amount based on the size and type of the huts considering their economical and social status,” said Milind Sawant, Deputy Municipal Commissioner in charge of the assessor and collector’s department.
In 2010, the BMC switched from the rateable value-based system (which operated on a notional rent-earning capacity of a structure) to the capital value-based system of assessing property tax.

In order to levy property tax as a lumpsum, the BMC will have to make amendments to the Mumbai Municipal Corporation Act, which means the BMC’s law committee and then the general body of the BMC will have to give their nod to the move, after which the amendment will be sent to the state government.
“We plan to levy the property tax from April this year. So, before that, we will try to get the necessary amendments,” said the official.

On Tuesday, the proposal was placed before the law committee that has asked more clarity on the definition of slums by the civic administration. Officials said they would modify and submit a fresh proposal.

Last year, while presenting the budget for 2015-16, the civic chief had announced plans to levy property tax on slums. Abhay Pethe, professor of economics at Mumbai University, was also roped in for guidance on devising a formula to levy the tax.

“The definitions of slums are descriptive in the Acts. We studied that. I had advised the civic body first to prepare a tax calculator and ask the slum-dwellers to get their slums assessed by NGOs in their wards. It would be difficult to assess the huts individually,” said Pethe.

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