The decks have been cleared for the state government to rationalise property tax in Mumbai and levy the charge on the basis of capital value rather than rateable value.
Market rate of property will be taken into account
MUMBAI: The decks have been cleared for the state government to rationalise property tax in Mumbai and levy the charge on the basis of capital value rather than rateable value.
A joint select committee of the state legislature has almost reached a consensus to exempt properties smaller than 500 sq feet carpet from the capital value-based system for five years.
A final decision will be taken at the concluding meeting of the committee, slated for June 17. Thereafter, the urban development department will move a bill in both houses of the legislature to charge a capital value-based property tax. The bill is likely to be moved in the monsoon session, which starts in the second week of July.
Once both houses pass the amendment in the Bombay Municipal Corporation Act, 1888, the new tax structure will become applicable with immediate effect, fulfilling one of the conditions of the Jawaharlal Nehru National Urban Renewal Mission.
But rationalisation does not mean residents in the suburbs will immediately start paying lower property tax than those in the island city. That is because the increase in property tax for any property will be capped at 100 per cent of the existing amount for residential premises and 200 per cent for commercial premises.
Also, revisions in the property tax will only be carried out once in five years.
But there is some cheer for suburban residents. The lower limit for revision of the tax will be abolished. Thus, for certain properties, the tax could come down to as much as a fourth of what the owners are currently paying.
Minister of state for urban development Rajesh Tope told DNA: "The committee has proposed to exempt middle-class residents from the additional tax. Hence the exclusion of flats less than 500 sq ft is under consideration. Also, the lower limit, which was 50 per cent as per the earlier draft, has been abolished while the increase in tax will not be by more than two times." The exemption from increase is expected to benefit families living in 85,000 tenements in chawls and buildings in the island city as well as residents of 17,000 cessed buildings in the island city.
But the capital value-based property tax is expected to increase the BMC's revenue by Rs1,000 crore. Last year, the BMC earned Rs2,000 crore in property tax.
Legislators from the island city have been dead against the application of capital value for property tax. BJP MLC Madhu Chavan, a member of the legislative committee, said that his party and the Shiv Sena insisted on exempting smaller houses from the purview of the new system. "If the decision in pending cases relating to the Rent Control Act goes in favour of the building owners, the rents for residents in the island city will anyway go beyond their reach. We have ensured that at least some relief is offered to them in the property tax reforms," he said.
Chavan, however, agreed that corruption in the collection of property tax will be almost wiped out with the capital value system. In the current rateable value system of property tax, the BMC's assessor has a lot of scope for manipulating the figures.
g_surendra@dnaindia.net
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