If you are staying in the island city get ready for a hike in the property tax you pay the civic body.
The civic standing committee will, on Wednesday, discuss a proposal for adopting a new property tax structure for Mumbai. The proposal is to charge property tax on the capital value [market rates] of a property.
Property tax is currently charged rateable value basis [on the rent a property can earn].
Those who own property in the island city would have to pay more property tax as real estate rates are high here. Those living in the suburbs, where real estate rates are comparatively lower, could see a 25 to 30 per cent reduction in property tax.
However, those staying in small houses—of up to 500 sq ft in area — in the island city will be exempted from the new tax structure for the first five years. The subsequent hike will not be more than 40 per cent of the last tax amount paid.
Properties with over 500 sq ft area may see a 100 per cent rise. The State Legislature has already amended property tax laws and the new tax structure will be applicable from the coming financial year if the standing committee clears the proposal.
The new tax structure is also expected to increase the BMC’s revenue by ten per cent.
Property tax was earlier computed on the basis of the rent paid by tenants. Rents for old buildings in South Mumbai were frozen at rates that existed in the 1940s. The property tax residents of these buildings, thus, paid was meagre.
Property tax will now be calculated on five factors — the price of property, its area, the age of the building, whether it is a commercial or residential property and the type of construction [concrete, wooden, etc].
Home buyers to pay more as registration fees
Planning to buy a home? You will now have to pay extra as registration fee on property transactions.
Home buyers will have to pay one per cent of the market value of the property as registration fee as the state government has removed the cap of Rs 30,000 it charged on property transactions.
Registration fee is the service charge charged by the government for preserving the property documents.
Till the new notification was issued, the state used to charge either Rs 30,000 or 1 per cent value of the transaction — whichever was less — as registration fees.
Now that the cap of Rs 30,000 has been removed, the fees will be 1 per cent value of the transaction.
This means if a person buying a flat for Rs 40 lakh will have to pay Rs 40,000 (1 per cent of the sale value) as registration fee. Earlier he would have paid not more than Rs 30,000.
The Registration Fee and Stamp Duty Payers Association has decided to approach the Bombay High Court against the order, calling it “a classic case of double taxation”.