The BMC has proposed to increase property tax rates in Mumbai by 14% based on the new ready reckoner (RR) rate, but the plan is expected to face stiff opposition as municipal elections are barely a few months away. The civic standing committee on Wednesday deferred discussion on the proposal till next week.
Civic sources said with the municipal elections just over six months away, the proposal could turn into a political hot potato, especially for the Shiv Sena, the ruling party in the BMC. The party also heads the MVA government.
The current property tax rates are calculated on the RR rates of 2015. But the BMC wants to revise the calculations based on the current RR rates, which are much higher. BMC officials said that the revision in property tax rates last took place in 2015. According to the amendment in the Mumbai Municipal Corporation (MMC) Act, the revision in property tax rates is carried out once in five years and this is usually done at the end of the fifth year. The fresh revision was scheduled for 2020-2025. The BMC has decided not to increase the rate of tax, but officials said that if the tax is calculated on the new RR rates, it will lead to an increase in property tax for residents.
The BMC has also proposed to allow hotels and restaurants to pay property tax as industrial units instead of as commercial units. Officials said that this will help hotels and restaurants since property tax rates for industrial units are less than commercial units.
Congress corporator Ravi Raja, who opposed the move, said the proposal to revise the tax was deferred to the next standing committee meeting. “We are against any hike in property tax even if it’s by way of calculations based on the new RR rates. The BMC can’t hike rates for home owners when they are giving doles to hotel and restaurant owners. There should be no hike in property tax as people have lost income due to the pandemic and the lockdown. We will oppose this move,” Raja said. Samajwadi Party MLA and corporator Rais Shaikh also opposed the move.
Last year, in a relief to lakhs of residents, the BMC had proposed a total waiver in increase in property tax rates for a year. BMC officials said if the rates were revised as scheduled in 2020, residents would have faced a hike of up to 40%. According to BMC officials, there are 4.2 lakh property owners in Mumbai, of which 1.4 lakh have houses that are less than 500 sq ft and they are eligible for a property tax waiver.
“Property tax is calculated on capital value of property based on RR rates. The RR rate is multiplied with various factors like year of construction, floor rise, carpet area of the property, nature of construction, ward in which it is located to determine capital value of the property, among others,” explained an official.
