New bill waives property tax on flats smaller than 500 sqft

The bill passed in the legislature has stated in its objects and reasons that “due to the current rising inflation, the increased property tax is not affordable to the people residing in smaller flats”

Mumbai The state legislature has cleared the bill paving the way for property tax waiver of residential units measuring less than 46.45 square metre or 500 sq ft in Mumbai. This bill converted the ordinance issued by the Maharashtra Vikas Aghadi (MVA) government last month to give respite to 1.61 million flat owners in the city ahead of the civic polls.

The Thackeray government had faced the flak from the opposition on the issue during the winter session held in the last week of December (HT PHOTO)

The bill passed in the legislature has stated in its objects and reasons that “due to the current rising inflation, the increased property tax levied by the BMC is not affordable to the people residing in smaller flats. Also due to Covid, many businesses in Mumbai have been closed and many people have lost their jobs and source of livelihood. In this backdrop there was consistent demand for the waiver of the property tax....”

In order to implement the decision, the state government made amendments in three laws — Mumbai Municipal Corporation Act, Maharashtra Education and Employment Guarantee Cess Act and Maharashtra (Urban Areas) Protection and Preservation of Trees Act.

The state cabinet in January had decided to waive off the tax in the wake of the criticism of partial waiver after the announcement made by the previous Bharatiya Janata Party-Shiv Sena government ahead of the Brihnamumbai Municipal Corporation (BMC) elections in 2017. The announcement resulted in the waiver of only general tax, which is a component 10-30% of the property tax.

The then Fadnavis government, in consultation with the Shiv Sena led-BMC in 2019, decided to retain other components, giving partial respite to the residents of smaller flats. This led to the criticism of the half-hearted implementation of the polls manifesto. The Thackeray government had faced the flak from the opposition on the issue during the winter session held in the last week of December.

Taking note of it, Chief Minister Uddhav Thackeray on January 1 announced to waive off entire property tax for the smaller houses below the size of 45.45 sqm or 500 sqft. The decision was announced by the Thackeray government as ‘a new year’s gift’ to the Mumbaietes. The BMC collects ₹4,000-5,000 crore in property tax every year, of which ₹462 crore, including ₹45 crore as state government share, are from the smaller flats which will now enjoy the complete waiver from January 1, 2022.

The property tax has eight components including general tax, education cess, water tax, sewerage tax, tree cess and water benefit tax. The previous government had waived off only general tax, which is around 30% of the total property tax. The decision taken on Wednesday will see a complete waiver of the tax, which roughly ranges between ₹5,000 and 12,000 per flat per annum.