Current Forum. Mumbai
Additional Property Tax Levied by BMC on Rental Property
ADDITIONAL PROPERTY TAX LEVIED BY BMC ON RENTAL PROPERTY
The BMC has started charging an exorbitantly high rate of property tax for apartments given on leave and license after 1st April 2008.
This property tax amounts to as much as 41.5% of annual rent. In addition, the licensor must pay income tax and the housing society maintenance charges.
BMC is implementing a draconian law which is unjustified by any account as the licensor ends up pay about 76.5%(41.5% as BMC property tax, 33% as Income tax, 2% as society maintenance and registration charges for leave and license agreement) of the rent received as taxes.
I have spoken to many licensors, who are paying bribes to BMC assessing officers to get lower rents registered and hence lower property taxes levied.
Many of them have been making two different contracts to save taxes lately. The same will not work, once the new regulation based on the capitol value of the property gets in force.
How does anyone survive with this kind of taxation? If this is not extortion of money what else is it?
Last and the latest I read was that same has been put on hold due to the upcoming elections.
With an eye on the upcoming assembly elections, public representatives in the Brihanmumbai Municipal Corporation (BMC) held back an important proposal to implement new capital value-based system to calculate property tax.
Initially I declined to pay any additional taxes over and above what I was already paying, i.e. Income tax on the said rent, wealth tax and property tax every month on the property.
In 2010 I was forced by Society to cough up the amount prior renting out my flat last year.
Things are still unclear to many about this taxation.
I would like fellow senior members and Licensors to clarify following about BMC taxation on rental property:
1) Is this draconian law already in force in year 2012?
2) Can they retrofit this tax or is there an effective date for implementing this tax?
3) If one cannot afford to come up with the amount what is the next step?
4) Can Society refuse permission to the Licensor for leasing out his property and are they right in enforcing it as per the law.
5) Can anyone recommend attorneys that handle these kinds of cases?
Please assist in stopping this injustice to the public in Mumbai by the BMC.
Any links to this information and suggestions from fellow members is deeply appreciated.