If flat owners think they have got a bad deal under the new property tax system, it’s even worse for businesses.
The Brihanmumbai Municipal Corporation’s (BMC) tax rate for offices is four times the rate for residential properties. Experts fear that this increase in property tax for offices will spell trouble for many businesses that require large offices.
Banks will be the worst hit as their property tax is a whopping eight times that of residences.
Many believe that the new rates will impact the redevelopment of commercial buildings in south Mumbai, as most of them will go from paying a pittance to paying a humongous sum, dictated by the state’s Ready Reckoner rates of the year in which they were ready.
Rajendra Mehta, president of the Lessors Association of India, and a builder himself, said the new rates are drastically high for commercial properties. “Mumbai is the financial capital of this country. Instead of giving a boost to the commercial development, the BMC’s new taxation scheme will throttle any kind of development of office and commercial spaces. This when it had promised it would bring in a uniform tax rate of 0.3% for all properties,” he said.
Another property watcher based in Nariman Point, on condition of anonymity, said: “Not many offices will be able to survive this hike. Who will be responsible if corporates shift out and jobs are lost?”
Mehta too believes that offices will start shifting out.
“A few years ago, a major MNC that had offices in Cuffe Parade relocated to Chennai because the property tax, charged along with the rent it had to pay, was so high that it was not sustainable in Mumbai anymore,” he said.
A civic official working on the new property tax system rubbishes the argument. “As per civic our data, only 29 proposals for redevelopment of commercial buildings in the island city have been approved in the past five years. This proves that there is hardly any development activity in these areas anyway.”
The BMC maintains that only a section of buildings, mostly in the city’s the A and D wards, will face the brunt of the new system.