In order to bring uniformity in the property taxes levied in the suburbs and in south Mumbai, The Brihan Mumbai Municipal Corporation had introduced a new tax system from rateable to capital value in 2010 based on the built-up area, but was strongly opposed by all sections of the society, especially the residents of south Mumbai who enjoyed the ready-reckoner benefits but were paying property taxes on the basis of prevalent meagre rents. The residents of the suburbs of Mumbai were, however, paying higher property taxes.
The BMC is finding it increasingly difficult to refund a whopping Rs. 1,300-crore in property tax to those tax payers who paid their taxes during 2010-2014; the civic body has decided to tweak the existing tax formula to evade reimbursement to the affected.
Including the built-up area in the capital value-based property tax formula was opposed by the BMC’s corporators across party lines then. Citizens had also challenged this in the Bombay High Court. While the HC had asked the BMC to calculate the property tax on the carpet area till a decision is arrived at, citizens were given a choice whether to pay according to the controversial formula or the interim formula. Although most people paid as per the new formula, if the BMC continues accepting tax payments based on the interim formula, it would have to incur losses to the tune of Rs. 1200 – 1300 crore.
Further, in 2015, the BMC came up with a new formula by adding the factor ‘1.2’ in the calculation. The Standing Committee as well as the High Court demanded to know the basis of the formula and its legal validity. The civic body then sought the advice of Attorney General.
Finally when the Attorney General has given its opinion, the BMC has tabled the proposal where it tweaked the property tax formula in the name of revenue neutrality and will now charge 20% added tax from citizens.

Image Credits : DNA

The Smart City initiative of the Central Government aims at improving the quality of urbanization in 100 cities of India. Smart cities will receive funding to enhance their core infrastructure like water, power, sanitation, transport, housing and digital connectivity. Each Smart city is proposed central funds of Rs. 500 crore, state funding of about Rs. 250 crore and a similar amount from the local civic body.

Senior officials from The BrihanMumbai Municipal Corporation said Lower Parel in South Mumbai is a strong contender among other areas like Nariman Point, Andheri (W) and Fort for area-based development under the Smart City project. The BMC is in its final stages of preparing the SmartCity detailed report which is likely to be released in two months. Many rounds of stakeholder consultations are in process and feedback is also being elicited from citizens through social media like Facebook and Twitter.

“Lower Parel has both residential and commercial uses. It has a very different connotation as far as traffic is concerned; people can walk to work. Walkability is an important factor for development of a Smart City,” said a senior civic official working on the report. “Lower Parel is the only area in Mumbai with five suburban railway stations nearby; Lower Parel, Elphinstone, Currey Road, Chinchpokli and Mahalaxmi. A monorail station is also likely to come up in the vicinity, thus providing good connectivity to citizens via the mass transit system,” the official added.

“If Lower Parel is selected, many civic services can be improved in the area. Currently the BMC provides only four hours of water supply, but has proposed to increase it to twenty hours by next year. World-class roads will be built to ease heavy pedestrian traffic,” said another BMC official. The BMC, which is working on a city mobility plan, will take up Lower Parel as a priority area for implementation. The civic body has identified missing links in the area where bridges will be proposed connecting two areas, like Lower Parel to Saat Rasta. Planning on better waste management is also on the cards for this suburb.

However, S V R Srinivas, the Additional municipal commissioner said that the report is still in its draft stage and Lower Parel is only being considered among other areas. Due to the infrastructural advantages, this area has an edge over other nominees.

property service tax

In case of flat sales, the title transfer of immovable property with an issuance of an occupancy certificate will be exempted from any kind of service tax, on Monday the finance ministry stated.

It was long time issue in the real estate domain and to resolve this long standing issue which is directly related to the essentially of service tax on the time of sale of dwellings or flats after issuing the occupancy certificate and before issuing completion certificate. It is well known fact that these kinds of sales need consideration after the issue of occupancy certificate. According to official press release, “The definition of service under Section 65B (44) of the Finance Act, 1994, leading towards the issue of transfer of title in immovable property is not taxable”.

However; the clarification given by CBEC (Central Board of Excise and Customs) all the cases related to these areas are under the jurisdiction of BMC (Brihanmumbai Municipal Corporation) or MCGM (Municipal Corporation of Greater Mumbai).

Private-Consultant

As a part of new initiative “Ease of Doing Business”, BMC is planning to reduce the building permissions from over more than 150 buildings to 70 buildings. However; according to the reports of construction industry, it is“Eyewash” stating that there is need of proper building approvals system in all civic bodies which are dominated by the rampant corruption and delayed process to knock out money from real estate builders. But engineers and officials are calling it hot shot. Now architects are summoning to the real estate building proposals office at late night to process the relevant files.

On last Friday, Ajoy Mehta, Civic Body Chief informed that there are many civic group leaders who are not approving building permissions within the 90 days. However; in other cities of the world such as; Dubai and New York it takes only 90 days to get all kinds construction approvals for residential and commercial buildings. To sort all these kinds of issues now BMC has decided to bring down the number on building approvals and permission which is expected to drop by 150 buildings to 70 buildings. However; real estate builders are skeptical if move will work to get the solution which known as rampant corruption in BMC and it is the main reason of delay and getting approval for proposals.

Private consultants will help the real estate builders to get NOCs:

Now Civic Body is allowing real estate builders to take the help of private consultants to get the  no-objection certificates (NOCs), however; earlier real estate builders were sued to take the help of civic officials in exchange of money. In present, real estate developers have to procure no-objection certificates from different departments such as; traffic, fire brigade, hospitals and more. Cooperators said to Chief Minister, Devendra Fadnavis and Shiv Sena Chief Uddhav Thackeray will be requested to release the new building proposals booklets which were including commercial and residential buildings. These leaders were representing different political parties and to stop the corporation in civic body they try to sabotage the new rules because there are few corrupt officials which are used to create hurdles to get NOCs. The development plan (DP) and building proposals (BP) departments are directing reporting to the municipal commissioner.

Effect on Civic Body:

According to the Rais Shaikh, Group Leader of Samajwadi Party, “It is very nice initiative to bring in transparency in all civic departments. The building proposals department is one of the most corrupted units in civic corporation”. In present, it can take more than years to complete the all the procures for building permissions. Now administration wants to fix the time duration to complete all the procedure. Earlier, real estate builders were used to get the different NOCs at different stages, now they are deciding to not to hold back one NOC for others. And civic body is planning to make the procedure faster by issuing all permissions in 90 days, as per the statement of Yashodhar Phanse, Shiv Sena Corporator and Standing Committee Chairman. It is expected that this new rule will bring more transparency and provide an opportunity to do more friendly business. As per the statement of Manoj Kotak, BJP Group Leader, “Less time duration and fewer windows for clearances will mean reduce the chance of corruption”.

Construction industry have many other issues which needs to be sorted out and now BMC is planning to reduce the number of permissions as the best possible solution, but while claiming other issues it still needs to be addressed. However; the good thing that civic body has not reduced the tiers of approvals as well as of officers a real estate builder has to go to get the permissions. But for instance, the number of files and documents required just submitting a building proposal is 34.

“Ease of Doing Business” new initiative of BMC:

According to architects, the other major hurdle is the software of BMC which is not more than junk and every time civic officials are used to force it to get the desired result. According to real estate builders, we are welcoming the new initiative of BMC which is “Ease of Doing Business” because it is expected that it will not reduce corruption. Architects are called at midnight to the building proposal department by some engineers. But at some corner the industry is upset because to get freedom from corruption now civic body is decreasing the number of approvals. According to recent study, suburban developer had to pay security as well as premium fees more than 86 times at 14 different places within the BMC for a single project.

service tax

When it comes to sale of flats or transfer of title of immovable property, so now onwards after the issuance of occupancy certificate there will be no need to pay the service tax, as per latest guidelines of Finance Ministry of India. On Monday, CBEC (The Central Board of Excise and Customs) issued the clarification and statement for the related cases which are pending in these areas and are under the jurisdiction or BMC (Brihanmumbai Municipal Corporation) or MCGM (Municipal Corporation of Greater Mumbai).

On October 23, 2015, it has been conveyed to the Service Tax Authorities in Mumbai that all the dwellings or flats or apartments, or more, in which the entire consideration is received after the issue of occupancy certificate by BMC; will fall outside the definition of “Service” which comes under the Finance Act, 1994 and it means there will be no more tax for title transfer of immovable property, as per the statement of the Central Board of Excise and Customs (CBEC).

The concerning board in the Finance Ministry stated that all the clarification was issued to resolve the long time standing issue which is directly related to the levy of service tax on sale of dwellings or flats or apartments and more after the issue of occupancy certificate and before issue of completion certificate in the jurisdiction or BMC (Brihanmumbai Municipal Corporation) or MCGM (Municipal Corporation of Greater Mumbai).

Currently, service tax is levied at 14 %, but when it comes to housing projects so it is at the abatement of 75 % which means levied on the 25 per cent of the total cost.

BMC Property Tax payment

As per a new resolution of the BMC’s standing committee, property owners in Mumbai will have to pay an average increase of 14.52% as property tax from April this year. However, owners of flats that measure less than 500 sq ft will not pay the increase as they have been granted relief by the Chief Minister. Under the new rules, there will be no increase for this section for a period of 5 years; a  respite for around 17 lakh families living in houses which have less than 500 square feet of area.

For the information of our readers, The Brihanmumbai Municipal Corporation (BMC) has changed the property tax calculation from the earlier Rateable Value System (RVS) to the new Capital Value System (CVS).

So, how will the property tax be calculated now? Under the RVS, the tax was calculated based on the maximum amount of rent that the property could fetch in a year. The CVS is based on the market value of the property. Read on for clarifications on tax calculations and to know how to pay these taxes.

Calculation of Capital value:

Market value of property (X) total carpet area (X) weight for construction type (X) weight for age of building

The Ready Reckoner (RR) will help you arrive at the market value. RR is a compilation of the rates that denotes a fair value price for a property set by the state government. The builder may charge a premium over such rates however cannot under sell it. The RR gives the base value. Remember, the stamp duty and registration amount payable cannot be lower than these rates.

Check the ward / zone in which your property falls.

Weights for construction type are calculated in units. Refer below for details:

Bungalows & RCC construction 1 unit

Other than RCC (semi-permanent / chawls) -0 .60 unit

Under construction or vacant land 0.50 unit

Weights for age of building are calculated in units Refer below for details:

Properties constructed before 1945 0.80 unit

Properties constructed between 1945 and 1985 0.90 unit

Properties constructed after 1985 1 unit

Now, how is the property tax calculated?

Capital value of property (X) current property tax (X) weight for user category

A weight for user category is calculated in units. Refer below for details:

Hotels and similar businesses 4 units

Commercial properties (shops, offices) 3 units

Industries & factories 2 units

Residential & charitable institutions 1 unit

Where can you pay the property tax?

You can pay property tax at:

• The Office of the Assistant Revenue Officer
• the BMC Help Centres
• The Citizen Facilitation Centre at all the Ward Offices.

You can also make an online payment. Read on to note down the steps:

Log on to the BMC website:

http://cvs.mcgm.gov.in:7001/MCGM_CVS/

• Enter your account number mentioned in your property tax bill. In case you do not remember your account number, use the in-built search feature.
• Choose the option of payment: half-yearly or annually
• Enter the amount to be paid. You will be directed to the payment mode. Currently only ‘Net Banking’ service is available.
• After the payment is successful, the system will generate a receipt. Print it and store for your record.

Make sure that your record is updated and no ‘outstanding’ is shown against your account. In case of such amiss, the responsibility to get it rectified is on you.

BMC gain 15 per cent profit in property tax collection

After implementing new rules and modifying old rules, BMC estimates that it will gain 15 per cent profit in property tax collection which will be approx Rs 4,400 crore.
The cash rich Brihanmumbai Municipal Corporation is excepting that for the years 2015, it will gain 15 per cent gain or profit in property tax in all over the city with the revised rules for 2015 to 2020. The revised set of new rules also fixed the increased rates for residential as well as commercial properties in all over the categories and it was presented to the group’s leaders of the corporation on the Monday. However; the property tax is planning to represents the new rules in front of standing committee on Wednesday. Whereas; while cashing the money BMC estimates the property tax collection of Rs 4,400 crore. he Brihanmumbai Municipal Corporation has also done all the calculation as per the new formula which refelt the change in the property tax collection and opposed by the most of the politicians and citizens in all over the board in last year. Apart from the new rules the BMC will also revised the current slabs that is expected to grow by 40 per cent on an average in the property tax collection.
According to the statement of senior civic official who is working in the assessment department, we have faced the many problems after the implementation of capital value based system, however; we have identified few of the most common glitches and revised the same with new rules. When this system was introduced in the year 2010, it was under the revision for every 5 years and so the new set of rules are applicable till 2020 after the approval. In the revision, BMC has done and use the new formula to collect the property tax.
The civic body of BMC has proposed the new set of rules to calculate the property tax such as; Ready Reckoner Rate * carpet area * 1.2%” in July 2014. However; this proposal was rejected in the same year by standing committee members and they criticized the civic body and said that they get failed to relieve the burden on the residential as well as commercial property owners in Mumbai. Whereas; after the sometime same civic body proposed the new set of rules to calculate the property tax which was as; RRR * carpet area, same was confirmed by the senior civic official. The more he added that in primary stage the rule was classified for 21 different set of categories that has made the assessment with very difficulty. But in new set of rules it was brought down to the 6 different set of categories to make the property tax calculation simpler and easier.
In the September 2014, with more number of petitions Bombay High Court said that BMC had wrongly calculated the property tax as per the built-up area rules, but after that civic body has formed the committee to review the new set of rules which is expected to come in the existence and effect from April 2015.

Government to take action against official authorities responsible for delay in SRA projects

If there will be any irregularities in the construction of residential units under the Slum Rehabilitation Scheme, so the action will be initiated within 24 hours of receipt of cheating complaints by the buyers of Slum Rehabilitation Scheme, said Prakash Mehta, Maharashtra Housing Minister. The more he added that the developer was fined because it was found that he was engaged in malpractices and it could increase from present fine which is Rs. 24 lakh if necessary. Maharashtra Housing Minister, Prakash Mehta was replying to the queries about the irregularities complaints which are pending SRA schemes.

Prakash Binsale, MLC of NCP asked that if state government is going to take any action against official authorities then who will be responsible for delay in SRA projects. He also requested that the entire schemes should be implemented by MHADA.

In reply Prakash Mehta, who is Housing Minister, stated that “Total 96 projects on MHADA land and 129 projects on BMC land are pending as concern officials haven’t submitted proposals. However, In December 2014, CM of Maharashtra Devendra Fadnavis took meeting of all SRA officials and it was first meeting after 13 years so few issues have come up lime light. Most of the MHADA officials accepted that there was no progress in any project in last three years. And now state government is thinking that justice should be done as slum dwellers as awaiting for it and action will be taken against every official without delay if we find instances of cheating.

The present amount of fine which will be levied on developers is approx, Rs. 24 lakh but government will not hesitate to increase the amount of fine if it will be essential. Till now government has fined K K Construction with the fine amount of Rs 24 lakh and recently complaint has been lodged at Mulund Police station against Arihant Construction Company. In last one year the action has been taken against 11 real estate developers. The minister added that government will formulate an ethical and comprehensive policy for Housing and real estate market, though which all the issues of SRA would be addressed regularly.

However, Devendra Fadnavis – CM of Maharashtra has already announced that soon he will bring new Housing policy and after that all the SRA issues will be addressed as per that policy. Whereas; Metha added that, we are inviting opinions from all the concern members.

residential property owners will have to pay the 11.74 per cent more residential property tax

If new proposed formula of the municipal administration to calculate property tax in the city is approved by the standing committee of the BMC on Wednesday so all the residential property owners will have to pay the 11.74 per cent more residential property tax than what is paid now and it will come in effect from April 1 2015.

As per the previous proposed property taxes system of BMC was based on the calculation of built-up area rather than carpet area. It is expected that the average of the increase in property tax across all categories will be 14.52 per cent with the new formula. While the earlier proposal would have taken the revenue from property tax to Rs 5077.62 crore, the revised proposal will mean a tax collection of Rs 4,563.33 crore. As per the statement of Senior BMC officials, we are confident on the new formula as it will get approval in the standing committee meeting to be held on Wednesday. It is expected that if new formula will not get approval, then property tax will increase by 27.43 per cent.

The new formula of property tax calculation is based on the carpet area and it will be presented to the group leader of political parties on Monday. The BMC has a target of collecting Rs 6,000 crore in property tax every year. As per the statement of senior official, “We are expecting to get Rs 90 crore on average from new properties in an addition to Rs 4,563.33 crore and due to that we are meeting our target and not even burdening Mumbaikars”.

Now with the new proposed formula we will get Rs 1,475.22 crore from residents, whereas; earlier we would have got Rs 1,320.21 crore. Now with the new proposed formula is it expected that we will get Rs 595.98 crore from open land whereas; earlier we would have got Rs 460.32 crore. On residents the increased burden would be only 11.74 per cent.”

Small properties will be excluded from new tax system

In a positive move to bring relief to around 8 lakh households in the city, BMC has decided to exclude structures below 500 sq ft from the capital value based property tax system once again. They will now continue to pay property tax based on the old system of ready reackoner rates.

This fresh proposal was tabled before the civic general body meeting by leader of the house Trishna Vishwasrao (Shiv Sena) as the made a suggestion that structures under 500 sq ft should be excluded from the capital value based property tax system as many of these were Maharashtrian households. According to new property tax proposal the BMC had decided to charge properties below 500 sq ft as per the new system, at the standing committee meeting on Thursday. This BMC proposal passed unanimously in the civic general body meeting however, now proposal will be sent to the state government for its final nod. If BMC proposal will get the nod from state government, so it will continue for five years.

As per the Civic officials, with new changes in property tax system BMC would lose additional revenues of Rs 55 crore by excluding below 500 sq ft structures from the system, as civic body was earning Rs 148 crore from these structures under the old ready reckoner system.

As per the Congress corporator Pravin Chheda, “It was the proposal of earlier Congress government which had given exemption to people to live in structures of 500 sq ft from the capital value based property tax system. So we demanded adding this to the new proposal.” As we all know that with effect from April 1, 2010, the BMC was adopted capital value based property tax system, and according to it the tax was about calculated on the basis of capital value of the property. And after that state government had decided to exempt structures below 500 sq ft from it for the five-year period of 2010-15.