Property tax revenue down after HC order, claims BMC

  • Poorvi Kulkarni, Hindustan Times, Mumbai
  • Updated: Dec 12, 2014 00:19 IST

The civic body’s property tax collection is yet to touch even 50% of its estimated revenue for 2014-15. This could adversely affect the Brihanmumbai Municipal Corporation’s (BMC’s) income for the current financial year.

The BMC collected Rs1,916.5 crore in property tax between April 1 and December 8 this year. This is just 48% of the total revenue target of Rs3,956.29 crore, which the civic body aims to achieve by March 31 next year.

The property tax collection has fallen by Rs163,86 crore as compared to the corresponding period last year.

Between April 1 and December 8, 2013, revenue collection stood at 2,080.37 crore. The estimate for the previous financial year was Rs3,955.81 crore.
The civic body has attributed this drop in revenue to the Bombay high court’s February 23 judgment. The court directed the BMC to collect tax under the old rateable value system and accept only 50% of the differential amount in cases of tax hike under the new system.

“There is a drop in income this year on account of the high court order. Last year, the income was high, partly also because the tax was levied with retrospective effect and bills were sent and paid by property owners for three years, from 2010 to 2013,” said RB Arote, assessor and collector, BMC.

The BMC shifted the property tax calculation from rateable value-based to capital value-based in May 2012 and bills calculated under the new regime were first sent from the last week of December 2012.

Calculated based on the ready reckoner rates and physical attributes of properties such as age, floor number, construction type etc, taxes under the new system shot up three times for 19% of residential properties in the city, with many old buildings and buildings in island city the worst hit.

Under the old system, the rental value of properties was taken into account to
calculate tax.

Taxes of commercial properties and banks were also hiked up to four times and eight times respectively over the tax that these owners paid under the old system.

“Looking at the trend, we expect to reach at least 80% of the demand,” added Arote.

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