Mumbaikars likely to be imposed Infra betterment tax
A betterment tax is likely to be imposed on Mumbai residents living in close vicinity to the transport infrastructure projects that are coming up. This cess was proposed in 2012 by the Mumbai Metropolitan Region Develoment Authority (MMRDA) as well as the planning and nodal agent, to part-finance the capital expenditure associated with such projects. A decision in this regard is still pending with the government.
Decisions regarding who will come under this tax bracket and the rate of tax that will be imposed are pending with the government. Also, a decision is pending as to whether the tax recovery should be only from owners of new commercial, residential and industrial properties or from existing owners as well. There is a possibility that 10% of the saleable value of properties have to be paid as betterment tax by owners of residences and commercial establishments along or in the vicinity of these infrastructure projects, what with property prices having surged in these corridors.
As per the estimate of MMRDA, implementation of the new as well as ongoing projects associated with the upgradation of the transport infrastructure of Mumbai would involve a cost of Rs. 80,000 crores. It involves pending work on the metro rail, mono rail, freeways, sealinks, elevated corridors and coastal roads. The idea for the betterment tax was expressed by MMRDA on the lines of a similar type of levy that had been imposed in Singapore and many other European countries.
The 9,360-crore Mumbai Trans Harbour Link project connecting Sewri and Nhava Sheva has also been delayed due to issues related to bidding. The project which was first tendered in 2008, and then in 2009 did not evince sufficient positive responses. After more than three years of delay, five bidders were shortlisted by MMRDA, when the project was tendered a third time. A vialbility funding gap of Rs. 1,920 crores will be provided by the government.
There is also an indecisiveness regarding the Worli Haji Ali sea link project. The Rs. 5,000 crores project has run into rough weather with the Maharashtra State Road Development Corporation and Reliance Infrastructure, who were awarded the project, parting ways. Despite the concession agreement signed for the project in 2010, it is still to take off, due to issues regarding the change in framework of the project.
The Rs. 14,573-crore Navi Mumbai International airport project has also faced a roadblock, inspite of environment clearances in 2010. Land acquisition to the tune of 450 hectares of private land is still under dispute as the land owners are demanding a 35% share once the land is developed. The project was envisioned to cost Rs. 4,766 crore in 1998 so as to handle 40 million passengers annually. However, due to the inordinate delay, the project cost has subsequently risen to Rs. 14,573 crore currently, so as to handle 60 million passengers annually. This amounts to an appreciation in cost by 305.8%.
Considering the cost involved in these upcoming infrastructure projects, the government has no other option but to decide on imposing the betterment tax on properties owners in the vicinity. It is felt that the tax imposition is justified as the owners will stand to benefit when these projects get completed. Besides, the betterment tax amount incurred by property developers would be passed on to the buyers, which would indirectly result in an increase in realty prices in such areas.
