Aim is to avoid people taking undue advantage of waiver, which might lead to decline in revenue
Mumbaikars living in houses admeasuring 500 square feet or less may have to wait until Lok Sabha elections to get relief from property tax. However, benefits will come with preconditions to avoid people taking undue advantage of the waiver which might lead to a decline in property tax collection which is the prime source of income for the civic body.
BMC earns around Rs 5,000 crore from property tax every year. The civic body collected Rs 5,132 crore property tax in the financial year 2017-18 and have a target of Rs 5,206 crore this year. A major chunk of revenue comes from the 15 lakh houses which are less than 500 square feet. If the civic body waives off property tax it means reducing tax inflow by Rs 350 crore. Following the cancellation of octroi, property tax remains to be BMC's biggest revenue generator, and the civic body does not want to lose any further revenue.
BMC officials said that people could take undue advantage if any waiver is introduced in the current system.
"BMC might be able to bear the burden of a loss of Rs 350 crore, but the bigger challenge lies ahead. Some people may divide their properties into two or more parts to take benefit of the rebate. It will seriously impact on revenue generation," said a BMC officer. Thus, despite the proposal of rebating tax for houses less than 700 square feet being passed in the house of the BMC, the civic body did not send the proposal to the Urban Development (UD) department. Now after the political commitment, the civic body officers are working on the precondition of the waiver for under 500 sq ft houses.
A senior officer with the BMC said, "We are preparing the conditions. BMC will put a cap so that only old houses under 500 sq ft which are already registered with the civic body can avail the exemption. This exemption will not be applicable to new buildings or the houses."
In the last municipal election of 2017, Shiv Sena, as well as BJP, promised to waive property tax of small houses. The BMC administration kept mum on the issue during the budget for 2019-20, neither did it find a mention in last year's budget. Now, the decision is likely to be taken before Vidhan Sabha election.
REVENUE TARGETS
- Rs 5206 cr Property tax target for 2018-19
- Rs 5132 cr Tax collected in 2017-18
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