Realty body backs consumers, slams Mumbai's new property tax slabs

Upset over the new property tax structure proposed by Brihanmumbai Municipal Corporation (BMC), Mumbai’s civic body, realty estate developers body MCHI-CREDAI has extended support to the consumer agitation against the new slabs.

Paras Gundecha, President, MCHI-CREDAI, said the new property tax formula is against the consumer interest. At a time when the common man is already burdened with the series of taxes like stamp duty and VAT, the increased property tax is bound to deal a cruel blow to flat owners, he told Firstpost.

“It is high time the government brings greater clarity in the calculation methods it uses for these taxes and reduce the burden on consumers,” Gundecha added.

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The new tax system is based on the capital value of the property and uses the ready reckoner to compute this value against the previous system, that was based on the rental or rateable value.The change means now the tax is being calculated on the market price of the property. The bill also included arrears since 2010, which makes the total amount rather daunting.

Under the new system, owners of flats in Mumbai with a carpet area of 500 sq ft or less are exempt from any increase in property tax for the first five years.

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Mumbai residents over the last two months have received hefty bills on account of property tax dues, which is being charged with retrospective effect from 2010 as the tax in many cases has been doubled for residential properties and almost tripled for a majority of commercial buildings in the city.

While the BMC has extended the last date( it was 31 March earlier) to pay property tax bills, citizens have challenged the levy under the new system as paying bills for three years will burn huge holes in their pockets.

Over 35,000 housing societies along with 40 NGOs have planned a one-day hunger strike and a rally against the new property tax system.

According to experts and activists, the BMC has rationalised area-wise property tax without taking into account several crucial factors, such as leased and freehold land as well as multi-age and multi-type buildings, which affect the amount to be paid as property tax.

Capital value is calculated by taking into consideration elements such as age of the building, area of the property, nature of construction, ready reckoner rates etc.

BMC has already received more than 3,000 complaints about errors in the property tax buildings and so far, it has collected Rs 10 crore from citizens by way of capital-value based property tax.

Neil Pereira, a Khar resident, was quoted by the DNA as saying, “It is irrational to calculate the capital value of the property on the basis of the ready reckoner that is used for paying stamp duty, which is calculated on the basis of the locality and does not consider the condition of individual buildings.”

Moreover, by clubbing 400-500 plots together to arrive at the base value, the BMC has included luxury apartments, semi-permanent bungalows and even slums, even though each structure has a different value given its type.

According to the DNA report, the discrepancies occurred because BMC failed to carry out the necessary surveys of individual properties that would come under the property tax net.