Property tax rates likely to increase up to 14 per cent in Mumbai

Property owners in Mumbai may have to pay a higher tax this year with the Birhanmumbai Municipal Corporation (BMC) deciding to collect property tax based on the latest ready reckoner rates this year.

On Wednesday, a proposal from the Assessor and Collector department was tabled before the civic body’s Standing Committee, which if approved will come into force from April 1, 2021 and continue till March 31, 2025.

The corporation has proposed to increase the property tax based on ready reckoner rates as on April 1, 2021. Officials said this could increase the current property tax rates up to 14 per cent.

Ready reckoner rates help to calculate true market value of immovable property like land, residential, commercial industrial. It is one of the factors to calculate property tax. In Mumbai, there are 4.2 lakh property owners, of which 1.37 lakh have houses of area up to 500 sq feet. The last revision in property tax rates was done in 2015 for five years.

As per the amendment in the Mumbai Municipal Corporation Act, a revision in the assessment of property tax is done for a period of every five years and revision can also be done at the end of the five-year term. The fresh revision was scheduled for 2020-2025, but the BMC had decided against revising it last year in view of the coronavirus pandemic.

With revision, the BMC can increase the property tax up to 40 per cent. As per the proposal, however, the BMC will not revise the property tax rates for these four years as there is a case pending before the Supreme Court and the outcome of the case could affect the revised rules.

“We are not imposing scheduled revision of property tax as the decision of Supreme Court is awaited. The only change will be inclusion of changed ready reckoner rates,” Dr Sangeeta Hasnale, head of Assessor and Collection department, said. The Standing Committee has kept the proposal pending citing that they will need more time to study its impact on citizens.

Once approved the BMC’s revenue through property tax will go up by Rs 1,000 crore for 2021-22, which is much needed as Covid-19 has hit civic body’s income, officials said.

BMC officials said that the proposed rules will not impact properties with area up to 500 square feet. The proposal will also extend relief to hotels registered with the tourism ministry, as they will be granted industrial status which will provide rebates in their water tax, electricity, sewerage charges, property tax, development tax.

Amid Covid-19, the state government had issued guidelines in December 2020 to change the status of hotels from commercial to industrial to give a boost to the hospitality sector.

The proposal, meanwhile, has been criticised by Ravi Raja, the opposition leader in BMC, who has demanded to keep the property tax rates unchanged for the next year too as the second Covid-19 wave has left a severe impact on the economy. “The BMC has postponed revision for one year and it should do so for 2021-22 as well. The government itself is talking about the third wave of Covid-19 and this change in tax will burden citizens. I have opposed the move,” the Congress corporator said.

BJP corporator Bhalchandra Shirsat also said he will also oppose the proposed increase in tax. “We will not allow this increase. We will stage protest if the BMC goes ahead with proposal,” he said.

Standing Committee chairman Yashwant Jadhav said a decision on proposal will be taken only after the discussion with all leaders.