Are you planning to buy a new flat near Metro line, Monorail line or any other major infrastructure project in Mumbai? If yes, then be ready to cough up an additional 10 % additional development tax on property transactions in such areas.

The residential and commercial properties could get costlier as the state government is contemplating a 10% development tax on property transactions in such areas. The logic is that properties in these areas will command a premium once the projects come up.

Chief minister Prithviraj Chavan has asked the Mumbai Metropolitan Region Development Authority (MMRDA) to send a proposal to the state planning commission on how this tax should be levied. The move comes after the MMRDA complained that its resources were getting depleted and there were no new avenues of revenue generation.

The MMRDA plans an initial one-time 10% development tax on the ready-reckoner value. This tax will have to be paid while registering the property in new developments or existing structures. While 7% of the tax is likely to go to the MMRDA, the remaining 3% will go to the civic body. A final decision on the move will be taken by Chavan, said the sources.

However, the move has evoked a strong reaction from home buyers. Prakash Ojha, who is looking to buy property near Pratiksha Nagar Sion from where Mono rail passes, said, “ In fact, no Development tax should be levied at all as all such services are already chargeable. Already salary classed employees are paying more than their portion as taxes which are deducted at source, hence such a move is despicable, he added.

“It will be very cruel, unfair and inhuman if development tax is levied in addition to the other duties and taxes like stamp duty, registration, vat and service tax”, said Suresh Mirajdar, an executive working with an MNC in Goregaon. Instead of imposing this tax on new home buyers, it should be spread over the entire population in the form of increase in the monthly maintenance tax payable by all the flat owners.

Agrees Monal Patil: the benefits of the development like monorail, metro line , mumbai trans harbour link is for all and not only for the new home buyers. If it is a burden then it should be passed on to all and not the new entrant only. Old residential flat owners already have the advantage of having bought the property at lower rates and majority of the existing home owners need not necessarily be the actual users and can also be investors. The government should look at it from the point of view of the new property owners, she said.

With the growing demand of real estate, there are many areas around Mumbai which have been coming into the limelight. According to the data and surveys conducted by one of the leading real estate portal, capital and rental values in Ghatkopar West have increased nearly 50% in the past 2 to 3 years. And seems like with the development of the VAG Metro, this percentage might further increase by 15% in the coming few months.

Versova-Andheri-Ghatkopar Metro

Versova-Andheri-Ghatkopar (VAG) Metro:

This is Mumbai’s first metro linking areas like Andheri, Western express highway, Azad Nagar and other areas like Airport Road and Sakinaka. So it also a connecting link between the east and west suburban areas of Mumbai.  This has not only enhanced the connectivity experience but also the property market. Due to this metro, the hectic travel time during the peak officer hours has been reduced and people can now reach from Versova to Ghatkopar in mere 20 minutes and they don’t need to change train at Dadar to reach their west suburbs offices anymore.

Why Ghatkopar:

With the decrease in traffic congestion and reduced travel time, the home buyers are looking for property in these areas. Nuclear family and young working couples who find property out of reach in areas like Andheri and Western suburban’s are now looking towards Ghatkopar for purchasing property. Currently there more than 60% people who are belonging to middle class families hence they are looking for localities which can provide them the basic infrastructure like schools, hospitals, banks and shopping centers. There is presence of some of the best known schools like Saraswati Vidya Niketan, colleges like NIIT and amusements areas like M G Road. These localities will have fewer burdens on their pocket. An average property value in area like Andheri is around Rs 18,500-24,000 /sq ft but areas like Ghatkopar offers the same at the rate of Rs 14,800-18,400/Sq Ft. We can see what a difference it makes in terms in property value.

We can see, even though the price of the capital is reduced, the covered area is much more. Even if we consider rents in these areas, they are way too low when compared to areas like Andheri etc. Rents in areas like Andheri is around Rs 52/Sq ft but the rent in Ghatkopar is around Rs 41/Sq ft. So, the rent one might be paying for 1 BHK in an area like Andheri is like paying rent for 2BHK in an area like Ghatkopar. At the end, lower cost of living, availability of necessary infrastructure and now the newly connecting VAG adds to the real estate market in Ghatkopar, which will be a treat for investors and as well residence seekers.

So, if you are looking out a property that is not only easy on the pocket but also good on the investments and return, then Ghatkopar West, Mumbai is your destination because it has potential for both investors and home seekers with best ROI in country.