While the BMC may have passed their new proposal on property tax, the Congress has decided to oppose it tooth and nail and will approach the court for the same. As per the new law, the BMC will, from April 1, charge property tax based on the carpet area of property you own, as opposed to the earlier built-up area based calculation.
mid-day’s March 19 report
As per the Mumbai Municipal Corporation Act, the proposal had to be passed by March 20 in order for it to come into effect from April 1. It was pandemonium in the Standing Committee hall on Thursday, as the Shiv Sena-led legislators voted to pass the BMC’s proposal to change the way property tax is calculated.
The administration proposed to shift to computing tax based on carpet value, and had dropped the floor rise factor as well. Congress voted against the proposal but the majority led to the proposal being accepted. mid-day had reported on March 19 that the Congress had decided to obstruct the proposal.
As per the BMC, the revised formula would’ve actually reduced in lesser tax collected from residents: while tax computed with the old formula would’ve raked in Rs 5,077 crore, the revised formula will actually bring in Rs 4,563 crore as property tax revenue for the civic body. BMC estimates it will collect R3,984 crore in the financial year 2014-15.
The party’s opposition to the new formula is that while it may compute tax based on carpet area, the ready reckoner rates a big factor in the formula are drawn up based on built-up area of the property. Pravin Chheda, Congress corporator, said the stamp duty and registration office calculates the ready reckoner rates based on built-up area and, hence, BMC’s contention is flawed.
“We will go to the court and will bring this point to notice. We couldn’t stop the tax here, but we will surely not let Mumbai’s people suffer,” he said. The civic body shifted to a capital value-based computation of property tax in 2013, and applied this in retrospect since the year 2010.
This had caused widespread uproar among citizens, who questioned how property tax could be calculated on built-up area. BMC is embroiled in a High Court case in this regard. The Congress claims they might intervene in this matter.
Property tax formula
The BMC has, apart from reducing the area taken into consideration for the tax, also reduced the user factor (residential or commercial). While it was 1 in the older formula, the new proposal has reduced the user factor for residential buildings to 0.5, and the floor rise component has been entirely removed.
Old formula: Ready reckoner rate X user factor (1 for residential buildings) X (factor for type of construction) X (Age factor) X (built-up area of the flat) X (floor rise)
New formula: Ready reckoner rate X user factor (0.5 for residential buildings) X 1 (factor for type of construction) X 1 (Age factor) X (carpet area of the flat)