Property owners to move court against new tax system in Mumbai
Unsatisfied property owners in Mumbai are planning to move court over the new way of calculating property tax. There had been already many criticisms in the past against the imposition of property tax in Mumbai and its suburbs with retrospective effect.
The property tax system based on capital value that has been planned recently but will come into effect from April 2010. This tax system is going to effect around two lakh self-occupied, leased and vacant properties in the city.
The civic authority has extended the deadline for paying the taxes to June 30, following 35,000-odd complaints from owners.
With the new system in place, it is assured that it will increase tax by 100-300%. The Property Owners’ Association is now considering an option to move the court against the capital value-based property tax system.
This association consists of 2,700 property owners controlling more than 10,000 buildings in Mumbai. They have been organising joint meetings and seminars to alert members and marshal public support about tax and other matter as well.
The group has already written to the President and Prime Minister of India seeking some relief along with the governor and the chief minister of Maharashtra. If no relief gained in time, then they will file a writ petition that is almost ready in the Bombay High Court before April 20.
As per BMC, the new property tax will be calculated at 0.41% of its capital value. For commercial spaces, the tax will be at 1.95% of the capital value, and for banks, it is at 3.91%. The new tax will be calculated on the basis of the current market value or capital value of the property based on factors, like age, price, location, and type of property.
A BMC official has commented that the entire system took 11 years to fall into place and may take some time to stabilise.
The new tax is obviously going to put off tenants and residents but will impact property redevelopment activities in future. The new property tax system is fine but the rate of tax and capital value of the new and redeveloped buildings has to be brought down with respect to old buildings. Without this, the redevelopment activity in the city will come to a standstill.
The Maharashtra Ownership Flats Act has stated that the developers should sell properties on a carpet-area basis. Residents will have to pay more tax when they are charged on the built-up area which includes stilt, porches and AC plant room.
Earlier, unconvinced with the new way of calculating property tax, Mumbai citizens were planning to move to Bombay High Court regarding the same. The new method is based on the capital value-based system.
The major concern of the residents lies with the ground realities, which affects a property’s price, are not taken into consideration in the ready-reckoner rates. They claim it is where the major fault in the system lies.
The new method of calculating tax and the transition was aimed at reforming the current municipal tax system, due to which a major cause for concern has risen. Furthermore, the senior citizens are even concerned about the receipt of huge property tax bills with retrospective effect from April 2010.
The citizens feel that the base value which BMC has considered to calculate capital value of a property is faulty. It is linked to the ready-reckoner rate which is decided by the state government’s town planning department.
The residents claim that the new system is ‘draconian’ and has slapped exorbitant arrears which have to be paid within March 15. As per reports, the tax was applied prospectively by BMC and not with retrospective effect as it should have been done as per first principle.
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