The civic improvements committee wants the Brihanmumbai Municipal Corporation (BMC) reduce the tax on revenue private schools built on civic land earn from renting their premises for weddings and other events.
Several educational institutions that have taken BMC land on lease, rent their auditoriums and grounds for weddings and other functions to earn extra revenue. The BMC charges each institute Rs 40,000 or 33% on gross annual revenue earned from this, whichever is more.
Improvements committee chairman, Manoj Kotak, has moved a proposal requesting the BMC to levy the tax on the schools' net revenue instead of the gross revenue to bring down the amount of tax paid.
“The income of these educational institutions is quite low. They have to rely on such alternative sources of income or it will be very difficult to maintain them,” Kotak told the Hindustan Times.
The BMC had on December 3 asked these schools to submit details of revenue earned by giving the school premises on rent for private functions. The managements of two schools, Pioneer Education Trust, Matunga, and Indian Education Society, Dadar, have approached the improvements committee complaining that this tax was causing them losses.
“Out of 62 schools that our institution runs, 42 are in deficit. We meet our growing expenses by renting out grounds and auditoriums,” said Satish Nayak, trustee of the Indian Education Society.
“We want tax relief because the amount we earn through commercial use is spent for maintaining school buildings and meeting other expenses.”
Sriram Bapaye, Secretary, Pioneer Education Trust, said: “We are insisting that we should be charged 5% on gross revenue earned from renting our premises.” The mayor will table the improvements committee's proposal before the group leaders of all political parties in the BMC. They will discuss the issue before tabling it in the next general body meeting.
Some corporators said levying the tax on net revenue will create confusion. “If the net revenue is considered, the BMC will have to keep records of the expenses, which will be different for every institute. I would rather ask the corporation to charge 5% tax on gross revenue or waive the tax completely," Upendra Doshi, Congress corporator from Matunga, said.