Even as citizens are expecting a dip in property tax bills, by seeking that their dues be calculated based on carpet area, the BMC has said that the same would result in massive drop in its revenues.
During a PIL hearing, the Bombay high court had last year directed the civic body to check whether carpet area could be used as the basis to calculate property tax, rather than built up area.
After this directive, the BMC had submitted a new formula considering carpet area. To balance the amount, however, the civic body proposed to multiply ready reckoner rates by 1.2 (factor).
Complaining that this factor would mean higher bills for the public, corporators had in August last year demanded that the BMC remove the same.
The civic body will table a proposal before members of a standing committee later this week. The officials have said that the removal of the 1.2 factor wasn't feasible as it would lead to a plunge in revenue, estimated at around Rs300 crore each year.
On condition of anonymity, an official explained how the move would impact in losses, saying: "We are set to lose an average of 12% if we execute capital value-based system (made effective since 2010) to garner property tax dues. But if we respond to the corporators' demand, then the losses will go up to 22% of the collections. Going by this, we will suffer Rs1,200 crore for a four-year period beginning since 2010."
The official added that after embracing the capital value-based system to collect tax, revenue to be collected from many properties has already come down. "In such a case, we can't afford to bring down the revenue further," he said.
Opposition parties however, say that the stand taken by the BMC will pinch pockets of citizens. Opposition leader Devendra Amberkar, who is also a member of the standing committee, reacted, saying: "Middle class citizens will be the ones who will suffer more. The BMC can't be looking at making money all the time."
Estimated loss in property tax collections after removing 1.20 multiple factor for deciding capital value:
Category
Present annual demand (in Rs crore)
Demand after removing 1.2 multiple factor (in Rs crore)
Loss expected (in Rs crore)
Residential
967.82
852.06
115.76
Industries
143.24
130.34
12.9
Non-residential
1572.55
1368.17
168.47
Total
2683.61
2386.48
297.13
Estimated drop in revenues in four years: Rs 1188.52 crore
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