The proposed tax system will lead to a huge disparity between the suburbs and South Mumbai, considering residents in both regions get the same service from the municipal corporation. Also, the high property taxes for redeveloped buildings will hurt the city's redevelopment market, forcing people to move outside the city.
According to the new system, the proposed property tax is 0.35% of capital value for residential units, 1.3% of property value for offices and 2.6% for banks. This will increase property taxes by 100%-300%. For example, the property tax for a 1,000 sq.ft. in localities such as Cuffe Parade, Nariman Point, Napean Sea Road and Worli will be between Rs. 8,540 and Rs 24,690. The taxes in areas such as Ghatkopar, Mulund, Kandivali and Borivali will be between Rs.3,280 and Rs 3,850.
Old buildings will be paying less while redeveloped and new buildings within the same area will be paying higher taxes. For example, old buildings on Napean Sea Road will be paying Rs. 1 per sq.ft. per month while the adjoining new/redeveloped building will be paying Rs. 24.69 per sq.ft. per month which is almost 25 times more.
The Bombay High Court recently intervened in the new tax regime and allowed property owners in Mumbai to pay taxes as per old rates along with a 25% differential between the proposed and the old system until a final decision is made. This has come as an interim relief for property owners in Mumbai.
The proposed tax system is based on the capital value of property. It is calculated based on the ready reckoner value, taking into account the age, price, location and the property type. The tax calculation previously used was based on a ratable value that represents the annual rent the property is or can be leased out for
It is the market value of property at a specific time. It depends on the stamp duty ready-reckoner. The government revises the capital value every year. The new structure will be based on a property’s current market value. Tax will be calculated on the basis of 5 factors – use, area, property’s price, type of construction and building’s age.
For 2010-2013, BMC sent final bills after switching over from the rateable value system to the capital value system. Similarly, in June, it processed bills for 2013-2014. More than 2.8 lakh bills have been sent across. The deadline is September 30 to pay both the bills.
Standing on a queue at CFCs across the 24 wards is the only option available and currently they are not working as online payment was discontinued after the new property tax system was introduced.