With the BMC finding it increasingly difficult to refund a whopping Rs1,300-crore in property tax to those tax payers who paid their taxes during 2010-2014, the civic body has decided to tweak the existing tax formula so that it can avoid having to shell out the money.
The Brihnamumbai Municipal Corporation (BMC) commissioner has tweaked the civic body's property tax formula in the name of revenue neutrality and will now charge 20% added tax from citizens.
With the BMC finding it increasingly difficult to refund a whopping Rs1,300-crore in property tax to those tax payers who paid their taxes during 2010-2014, the civic body has decided to tweak the existing tax formula so that it can avoid having to shell out the money.
The new formula, for which the civic body sought the attorney general's opinion, was tabled in the standing committee this week. The new tax system from rateable to capital value was introduced in 2010. However, the built-up area introduced in the formula was vehemently opposed by all sections of the society, especially the residents of south Mumbai who enjoyed the ready-reckoner benefits but were paying property taxes on the basis of prevalent meagre rents. The residents of the suburbs were, however, paying higher property taxes anyway. The new system was introduced to bring uniformity in the property taxes levied in the suburbs and in south mumbai.
Calculating the built-up area in the capital value-based property tax formula was opposed by the BMC's corporators across party lines. The formula was also challenged by citizens in the Bombay High Court. However, the high court had asked the civic body to calculate property tax on the basis of the carpet area until a final solution was found. The court had given citizens the freedom to choose if they wanted to pay their taxes as per the controversial formula or the interim formula. Most citizens did pay as per the new formula. But if the civic body continues the interim formula calculated on the basis of carpet area, this would lead to the civic body incurring losses of nearly Rs1,200-1,300 crore as it would have to refund the money to each tax payer who paid more taxes as per the built-up area and not carpet area.
However, in 2015, the BMC came up with a new formula by adding the factor '1.2' in the calculation. The standing committee demanded to know the basis of the '1.2' factor in the formula and demanded to know its legal validity.
Even the high court sought the legal validity of the formula. The BMC then decided to seek the opinion of the attorney general.
And now that the attorney general has given his opinion, the BMC has tabled the proposal.
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