BMC told to put property tax on hold

The BMC is set to revise the civic property tax system in the city, in an attempt to cash in on the rising demands and the rise of willing investors. According to the National Urban Renewal Mission (NURM), civic bodies have to carry out regular reforms in the property tax structure. The Planning Commission and the World Bank, which is financing some of Mumbai’s infrastructure projects, have also called for a realistic and modern system of calculating property tax. In response to this, the BMC appointed the Tata Institute of Social Sciences to conduct a survey of all systems of assessing property tax prevailing in India and also major metros across the world. The survey revealed that a majority of developing cities prefer the capital value system. This shift to the capital value system would affect a rise n the property tax.

The BMC currently earns about Rs 1,700 crore annually from the property tax revenue stream. This sum is expected to rise to Rs 2,300 crore if tax is calculated on capital value of properties. In a meeting at the Mantralaya in January, the State Government asked the BMC to put all property tax reforms on hold. The meeting was held to discuss the panic created by incorrect reports on property tax by sections of the media. The BMC was asked to stop reforms until the elections were over, as it was not appropriate to risk hurting the feelings of a particular interest group. This could be harmful for government interest at such a time. Switching to the capital value based system would have meant that properties in South Mumbai have to pay almost double their existing rent, as rents in these areas were frozen since 1940s. This news was received amidst dissent and objections. The government has since asked the BMC to freeze reforms in order to avoid widespread panic in the city.