If the spiralling property rates weren’t strong enough to deter buyers, the Mumbai Metropolitan Region Development Authority (MMRDA) is going to make it even more difficult to own a property now.
The MMRDA is pushing for a 10% development tax on the value of a property, as per the ready reckoner rate (the rate set by the state government for property in a particular area), to be set aside as development charges for improving infrastructure in the Mumbai Metropolitan Region.
The proposal, if accepted by the state government, could mean that people would have to shell out even more to purchase a property.
Metropolitan commissioner Rahul Asthana justified the imposition of the development tax saying that the amount generated would be utilised for the improvement of infrastructure in the region.
"The developer will pass on the cost to the buyer, but it would also mean that we will be able to improve the city’s infrastructure," he explained.
Asthana added, "[Of the 10% development tax], 7% can go to the MMRDA while the remaining 3% can go to the respective urban local body."
Officials said that according to the calculations, the development tax fund could generate at least Rs30,000 crore every year for the MMRDA to use.
The idea to charge development tax was floated in 2008 after a Canada-based consultancy, Lea International, which was commissioned by the MMRDA and the World Bank to conduct a ‘Comprehensive Transportation Study’ for the MMR, made recommendations to introduce the system to improve infrastructure..
The consultancy’s report called for less reliance on private investors and more involvement of citizens in paying for the city’s development projects.
Based on the consultancy’s recommendation, the MMRDA put forth the proposal to charge development tax on property buys.
The MMRDA has so far earmarked US$ 50.2 billion (Rs2.07 lakh crore) for improving transport in the city.