Property tax proposal rejected | mumbai | Hindustan Times
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Property tax proposal rejected

mumbai Updated: Sep 30, 2011 01:43 IST
Bhavika Jain

The proposal to introduce a new property tax system - one that aimed at rationalising the way tax is levied by the civic body - was rejected by the civic standing committee on Thursday.

With the civic elections only four months away, committee members - cutting across party lines - discarded the proposed system, terming it unfair and unreasonable.

Under the present structure, property tax is computed on the basis of the rent paid by tenants. Under the new structure, the BMC proposed to calculated tax on the basis of five parameters (see box for details).

The figure arrived at is known as the capital value of the property. This, when multiplied by the rate of taxation, would give the property tax chargeable.

However, the new structure would require property owners in the island city to pay twice the amount they currently pay. Owners in the suburbs would end up paying 75-80% less than their current tax payable, increasing the bridge between them.

Ashish Shelar from the Bharatiya Janata Party said that the new system was proposed to bring about parity in the property tax charged.

"If the revised system leads to an increase in property tax in 21 wards, out of the total 24, how can it bring uniformity," he said.

"The rate proposed was very steep. In case of commercial establishments, the tax will run into lakhs each month," said Niyaz Vanu from the Nationalist Congress Party.

Additional municipal commissioner Rajiv Jalota defended the proposal saying, "The new system is transparent. Of the 14.2 lakh residential units in the city, there is no change in the property taxes of 11.1 lakh units. There is also a cap on raising the taxes." The proposal's dismissal could spell financial trouble for the cash-strapped BMC as they will not be able to charge tax for buildings that have been constructed after April 2010.

The BMC can now draft a new proposal or can forward the same proposal to the state government for approval.