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.

property taxes by (NMC)

According to reports, recently, the NMC (Nagpur Municipal Corporation) has hiked the property taxes by 13 per cent for current fiscal. And it is expected that people in this region will witness the more hike in the second demand note with the time of implementation of new tax system.

It was big surprise for all taxpayers because the amount of tax has been increased by 10 per cent which is much more than expected. Recently, the civic body of Nagpur had taken two decisions, which is related to property taxes. One was to implement a new tax system for property under which tax is expected to rise by almost two times and the other is to introduce four new taxes with the hike of 4 per cent. However; the tax was rise by the 3 per cent after the implementation of four new different taxes. Whereas; in the first demand note, the Nagpur Municipal Corporation introduced four new taxes and scrapped one old tax system, which means tax was supposed to increased by 3 per cent, but tax increased by 13 per cent, which includes 10 per cent rise in general tax and 3 per cent rise in new tax.

The Nagpur Municipal Corporation (NMC) officials stated to TOI, that this new revaluation of existing properties is about to start with an aim to implement new tax system. The more they added that on demand notes it will be issued later that in current fiscal year we are asking the taxpayers to deposit more amount than previous under the new property tax system. Girish Deshmukh, who is the Chairman of tax consultative committee, stated that this new tax system will be good for taxpayers because the major beneficiaries will be them as they are used to rent the properties. With this new tax system, the property taxes for rented property will come down till to a great extent. The more he added that the tax amount of other properties will get the increase but it will be not more than two times. According to Deshmukh, it is the major step for the convenience of taxpayers and directives have been issued to make sure that mutation of all property taxes should be completed within seven days, however; for the assessment of new properties they have just 15 days.

As per the statement of Deshmukh, there will be the special camps for the assessment of new cases and disposing of mutation and these camps will be in all ten zones. Till now they have received 283 for new assessment and 356 applications for mutation, out of which 164 applications for new assessment and 134 applications for mutation disposed of in camps itself, and they have generated the revenues of Rs 32.54 lakh on that day.

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.