Less property tax for suburbs, more for island city likely | mumbai | Hindustan Times
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Less property tax for suburbs, more for island city likely

mumbai Updated: Aug 17, 2011 00:50 IST
Sujit Mahamulkar

The proposal for a new property tax system for the city, which aims to rationalise the system to calculate the tax, will be tabled before the standing committee of the civic body on Wednesday.

This clearance is crucial for the proposal. If it is passed here, it is likely to be cleared in the general body as well.

The new structure would reduce the property tax in the suburbs, and increase that in the city, as it will be based on the capital value of the property. Those living in the island city will have to pay up to 100% more, if their house is larger than 500 sq ft, while those in the suburbs will end up paying about 10-15% less. After implementing the new system, the civic body is expecting a Rs116 crore increase in revenue.

Currently, citizens are charged property tax according to the rental value of the property. As a result, most of south Mumbai property, where rents are lower owing to the Rent Control Act, are levied much lesser tax than those in the suburbs.

The proposed capital value system, on the other hand, uses the market value of the property to calculate tax. It also takes into account other parameters, such as age of the structure, nature of construction, usage and location.

Residential property in the island city, measuring up to 500 sq ft, will be exempt from the new tax structure, for the first five years after the system comes into effect.

Property tax includes general tax, road tax, tree cess, education cess, water and sewage tax, employment guarantee cess and state education cess. According to the current calculations, the civic body would get a revenue of Rs 2, 944 crore per annum. With the new, proposed system, the Brihanmumbai Municipal Corporation is expecting around Rs3,060 crore.

“Yes, we are expecting more income from proposed system,” said SB Hatkar, head of the civic assessor and collection (A and C) department.

The A and C department, which handles property tax, scheduled the switch from the old ratable value system, to the new, capital value base system, with retrospective effect from April 1, 2010. “We will discuss the system on Wednesday and then decide our stand,” said Rahul Shewale, standing committee chairman.