Civic body may offer property tax sops to builders

The Brihanmumbai Municipal Corporation (BMC) has planned to ease out the property tax structure for land under construction (LUC) in its upcoming revision of property

The Brihanmumbai Municipal Corporation (BMC) has planned to ease out the property tax structure for land under construction (LUC) in its upcoming revision of property taxes.

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According to the revised plan, the developers will have to pay as per the actual status of the construction. For instance, under the proposed scheme, if a developer gets an approval for a 10-storey building, but has constructed only two floors so far, the builder will be charged only for those two floors. Whereas, as per the current tax structure, BMC would calculate the proposed floors of the under-construction project and would levy a tax on that basis.

Pravin Darade, additional municipal commissioner (assessment and collection department), said, “Relief to LUC is being strongly considered, but I’ll only be able to comment once the revision of the tax is finalised.”

Property tax is the biggest revenue source for the civic body. BMC makes revenue of ₹5,000 crore every year from its property tax department.

Niranjan Hiranandani, president of National Real Estate Development Council (Naredco) said, “Taxation is such that under-construction property tax is higher than a constructed building. This leads to a rise in property rates. So a reduction in the tax amount will ultimately lead to a reduction in property rates in the future.”

Another realty developer, Bhavesh Sanghrajka of Shraddha Lifespaces, said, “The revision will surely benefit us. Why should we pay for the structure that has not been constructed yet, and is only on paper?”