BMC has a total outstanding property tax of nearly Rs 20,000 crore in the city. With the civic body facing a severe cash crunch this year due to Covid-19 and a slew of discounts to builders and contractors, BMC will soon attach and auction properties of defaulters.
It missed its property tax collection target of Rs 5,300 crore this year, and so far collected only Rs 950 crore. It has time till March-end to recover Rs 4,300 crore.
A senior civic official said most dues are from bulk generators like builders, hoteliers and commercial complex owners, in some cases since 2010.
“We will impose penalties at 2% per month on outstanding amounts if they don’t pay by March. We have attached several properties and will begin auctioning them. We will first auction commercial spaces and land under construction,” said Dr Sangeeta Hasnale, assistant municipal commissioner (assessment and collection).
BMC data showed that as on December 2020, total property tax it has to recover is Rs 19,950 crore. Officials said with octroi abolished property tax is the biggest source of income for BMC (24%). BMC has failed to achieve its target of property tax collection from 2017. Officials said they will soon publish an inventory of properties that will be auctioned.
Officials said it had set a target of Rs 6,788 crore for property tax collection for this year. “But we collected around Rs 950 crore so far due to lockdown and lack of clarity on collecting taxes from below 500 sq ft homes. Now we will collect tax, except the general tax component, from below 500 sq ft homes. There was to be a revision in tax rates this year, but it was shelved by the state government, so our target came down by 17%. Our revised target is around Rs 5,300 crore,” the official explained.
BMC estimates the city has over 4.2 lakh property-owners. Officials explained that BMC gives 90 days to defaulters to pay property tax after serving a notice. If they don’t pay up, BMC disconnects water supply. If owners still don’t pay, their properties are attached. BMC can initiate an auction on property within 21 days.
BMC had announced it will reform its property tax collection mechanism and structure. “A large part of recovery amount is pending due to a dispute over capital value system. This also caused an increase in outstanding year-on-year. The existing rule has many discrepancies that have to be streamlined. So far we have not been recovering the penal amount, but we will have to start this year due to revenue loss from other sources,” the official explained.
