Though the Brihanmumbai Municipal Corporation (BMC) has re-introduced the proposal of levying tax on slums in its budget 2017-18, there are several roadblocks that will make it impossible to implement it.
The BMC has proposed to charge property tax from slums on a lumpsum basis and not on capital value. This, however, requires an amendment in the Mumbai Municipal Corporation Act (MMC), 1888.
A senior civic official said, “Currently, tax is levied on six components like the type and area of the structure which when levied on the market value will be an exorbitant rate for slum dwellers. However, the Act does not allow us to charge property tax on a lumpsum basis.”
Another roadblock for BMC will be the political pressure to withdraw the proposal. “The ruling party wants to exempt property tax for houses below 500 square feet. The question of imposing taxes on slum dwellers seems impossible in this political scenario,” the official said. Before the civic elections were held in February this year, Shiv Sena chief Uddhav Thackeray had announced the waiver for Mumbaiites, but it did not reflect in the budget.
There are about 15 lakh slums in the city. The civic body has proposed a lumpsum tax of Rs 2,500 to Rs 18,000 under various categories.
The proposal — which needs to be approved by the law committee and the general body — was rejected by the former earlier. Civic chief Ajoy Mehta has proposed to re-introduce the decade-old proposal this financial year stating that it would yield Rs250 crores as revenue for the BMC. With the goods and services tax (GST) set to abolish octroi revenue worth Rs 7,000 crore, the civic body has been looking at alternate sources of income for two years.
In his budget speech on Wednesday, Mehta said that there is a “need to widen the tax net and also have a proper data base on all the assessees under its jurisdiction.” In 2006-07, BMC had told the Central government that it would bring all slums under the tax net. Under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), it was mandatory to levy tax on every structure in the city.
Till 2006-07, BMC would collect a service charge of Rs100 from residential slum structures and Rs250 from commercial ones every year.
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