How is property tax calculated in mumbai

how is property tax calculated in mumbai

Bombay High Court gives relief to property tax payers

Moneylife Digital Team | 10/03/2014 06:14 PM |

In an interim order, the HC asked property owners or tax-payers in Mumbai to go by the old regime and to pay 50% of the differential amount between the old and new rates

The Bombay High Court, while giving a relief to all property holders in Mumbai, has directed the city municipal corporation to accept taxes under the old un-amended rates with 50% differential between the old and new rates. In an interim order, the HC asked all property owners or tax-payers to go by the old regime and to pay 50% of the differential amount; up from 25% announced in the earlier interim order on 23rd December.

"We direct that the Municipal Corporation for Greater Mumbai (MCGM) shall accept the municipal taxes as per the above formula from other property owners, even if they have not filed any writ petition before this Court. However, such property owners shall pay taxes as per the above formula along with an undertaking to the Municipal Corporation that in case this Court negatives the challenge to the Constitutional validity of the Amendment Act, they will pay balance amount of tax and the interest on the balance amount at statutory rate within such time as may be granted by this Court," a bench of Chief Justice Mohit Shah and Justice MS Sanklecha said.

Under the new system, the tax is calculated on the basis of the capital value of a property, and the age of a building, its location and use are taken into account. Anomalies in computation and the hefty new taxes have

caused serious concern for home and property owners. The new taxes also carry the threat of hefty penalties for non-payment. Experts contested the new "flawed" system could push up the tax by 300% or more.

Property tax under the old regime was calculated according to the rateable value of a building, based on the expected reasonable rent it could attract. Writ Petitions by Property Owners Association, The Foundation for Medical Research, the Indian Hotels Co and a huge bunch of almost 40 other pleas flooded the HC. They all challenged the new property tax structure "unconstitutional, exorbitant and confiscatory".

Moneylife Foundation has conducted several seminars and counselling sessions on the property tax issue affecting Mumbaikars, ever since the MCGM sent out demands for its hefty revised property taxes with arrears for the past three years.

To recap Moneylife’s efforts with regard to property tax, we had our first talk on the increased burden that the property tax has caused on the people of Mumbai on 9 February 2013 with Ashok Ravat, a noted civic activist and founder-convener of the Shivaji Park Advanced Locality Movement and Advocate Godfrey Pimenta, President of Sahar Citizens Forum and an ardent RTI activist. Click here for more on the session.

This was followed by repeated one-to-one and group counselling sessions by Mr Ravat who guided Moneylife Foundation members on how the capital value method is flawed as it uses the Ready Reckoner value, which is not supposed to indicate real value. This method proposed by the BMC, has ‘intentional’ errors. The new system, the capital-value-based tax system is totally flawed and hasn’t been accepted by any other municipal corporation, except the BMC

Source: www.moneylife.in

Category: Taxes

Similar articles: