Changing its assessment formula, the Brihanmumbai Municipal Corporation (BMC) has decided to charge the tax on the basis of capital value of the property rather than the earlier rateable value based system. As per the new formula, property tax for Mumbaikars has increased by almost 40%.
In a major relief to Mumbaikars who reside in flats measuring 500 sq ft or less, there will be no rise in their current property tax for the next five years.
Changing its assessment formula, the Brihanmumbai Municipal Corporation (BMC) has decided to charge the tax on the basis of capital value of the property rather than the earlier rateable value based system. As per the new formula, property tax for Mumbaikars has increased by almost 40%.
However, chief minister Devendra Fadnavis has decided to exempt 17 lakh residents from the increased property tax based on capital value of the property. "The decision will come into effect from April 1, 2015. As per section 140 A of BMC Act 1888, the property assessment has been increased by 40%. But we have decided to give relief to people who are staying in flats measuring 500 sq ft and less and to commercial establishments," said Fadnavis adding that most of these buildings are quite old and likely to be redeveloped.
Meanwhile, the Shiv Sena has alleged that BJP took a unilateral decision to get the credit ahead of the civic elections scheduled for 2017. "We were the first to moot the property tax exemptions for five years. But the BJP wants to take credit ahead of the BMC elections, and therefore, they unilaterally announced the decision in the cabinet on Tuesday. It is the not right. We are partnering them in the government; so, equal credit should be given to us," said a Sena minister requesting anonymity.
Most of these beneficial properties exempted from the new tax structure are located in south Mumbai, viz., the Bombay Development Directorate (BDD) chawls, Kalbadevi, Bhuleshwar, Mohammed Ali Road, Girgaum etc.
The rateable value is the notional rent-earning capacity of a property, which has kept property taxes in several areas if south Mumbai artificially low as rents were frozen under the Rent Control Law. The BMC expected to earn an additional revenue of
Rs160 crore from this change in formula of property assessment.
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