Dues mounting over disputes, BMC plans new property tax rules

The civic body has set up a committee to work out a new taxation formula for the next five years. (Representational image)

Worried by long-pending disputes over property tax collection, the Brihanmumbai Municipal Corporation (BMC) has decided to reform tax rules in a bid to make them “coherent and transparent”. This found a mention in the BMC budget 2020-21 that was presented on Tuesday. The civic body has set up a committee to work out a new taxation formula for the next five years.

According to officials, although there will be an increase in property tax, the quantum of hike is yet to be fixed. New rules that will take at least a few months to finalise would be framed in a way that will ensure maximum recovery of bills from citizens. “The outstanding amount of property tax has gone up to Rs 15,000 crore. Over 70 per cent of the amount is pending due to a dispute over the capital value system adopted by the BMC for taxation. This has also caused an increase in outstanding year on year. The existing rule has a lot of discrepancies and that will be streamlined in the new policy,” an official said.

Officials said current property tax rules were challenged in the Bombay High Court owing to various reasons like the use of capital value system and different formula used for taxing houses below 500 sq ft. While the Shiv Sena had promised to waive off tax on properties below 500 sq ft, the civic body is planning to waive off only general tax, which is 30 per cent, and collect the rest 70 per cent. This confusion has caused a delay in issuing bills to citizens in the last few months. The BMC budget has projected a drop of Rs 335 crore in overall collection because of property tax waiver.