State defers discussions on property tax reforms
Mumbai’s much-awaited property tax reform has again been deferred.
By ET Bureau |
MUMBAI: Mumbai���s much-awaited property tax reform has again been deferred. The Maharashtra legislature has rescheduled a final discussion on a bill that proposes a more practical system of levying property tax for the Brihanmumbai Municipal Corporation.
The bill, which was planned to come up for a debate during the monsoon session, would now be presented before the legislature in a revised fashion in the winter session in November, government sources told ET. The government can also issue an ordinance if wants to expedite the process.
The state government had first introduced the bill during the budget session in 2007. It proposes to enable the BMC to adopt a capital-value system of assessing property tax. This system, its advocates argue, is more practical, realistic and dynamic, as against the rateable value system that most cities in India, including Mumbai, practice. ���The capital-value system allows citizens to calculate their own property tax. As this will bring in more transparency in property tax collections, there is more likelihood of the capital-value system leading to better compliance,��� principal secretary, urban development, Manu Kumar Srivastav, told ET.
He pointed out that the capital-value system was also modern as it factored in the current rental and market value of the property, its location, and even the standard of living of the occupant. The existing system makes properties in the suburban areas more taxable while leaving the island city less taxed.
Objections for the change raised by legislators from the ruling as well as opposition parties forced the government to refer the draft to a joint select committee of the House. The committee studied the draft bill for more than a year and suggested a host of changes. Last month, the committee approved the bill with revised provisions which aim at protecting households up to 500 square feet from steep hike of the property tax at least for five years from the date the new regime is introduced.
���We have ensured that a shift to the capital-value system does not subject ordinary Mumbai residents to a sharp increase in property tax. It was essential that this protection is incorporated in the bill. Now, almost all Mumbai legislators support it,��� Bhai Jagtap, one of the Congress legislators from Mumbai, told ET.
���The draft bill pending before the House is the one which was introduced last year. It does not have the changes proposed by the legislators. A new bill will have to be introduced now,��� said an urban development official. The official exuded confidence that the new bill would have a smooth passage during the winter session. ���We had reservations about the bill when it was introduced. It proposed a drastic rise in tax across various sections of Mumbai residents. Especially, the middle class people would have had to shell out quite a big amount towards property tax. But we have succeeded in making the bill much more acceptable now,��� said BJP legislator Raj Purohit.
It may be noted that reforms in Mumbai���s property tax system is expected under JNNURM which is funding a large number of Mumbai infrastructure projects.
The bill, which was planned to come up for a debate during the monsoon session, would now be presented before the legislature in a revised fashion in the winter session in November, government sources told ET. The government can also issue an ordinance if wants to expedite the process.
The state government had first introduced the bill during the budget session in 2007. It proposes to enable the BMC to adopt a capital-value system of assessing property tax. This system, its advocates argue, is more practical, realistic and dynamic, as against the rateable value system that most cities in India, including Mumbai, practice. ���The capital-value system allows citizens to calculate their own property tax. As this will bring in more transparency in property tax collections, there is more likelihood of the capital-value system leading to better compliance,��� principal secretary, urban development, Manu Kumar Srivastav, told ET.
He pointed out that the capital-value system was also modern as it factored in the current rental and market value of the property, its location, and even the standard of living of the occupant. The existing system makes properties in the suburban areas more taxable while leaving the island city less taxed.
Objections for the change raised by legislators from the ruling as well as opposition parties forced the government to refer the draft to a joint select committee of the House. The committee studied the draft bill for more than a year and suggested a host of changes. Last month, the committee approved the bill with revised provisions which aim at protecting households up to 500 square feet from steep hike of the property tax at least for five years from the date the new regime is introduced.
���We have ensured that a shift to the capital-value system does not subject ordinary Mumbai residents to a sharp increase in property tax. It was essential that this protection is incorporated in the bill. Now, almost all Mumbai legislators support it,��� Bhai Jagtap, one of the Congress legislators from Mumbai, told ET.
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However, the changes proposed by the city legislators have to be incorporated and a revised bill has to be presented before the House, sources said. ���The draft bill pending before the House is the one which was introduced last year. It does not have the changes proposed by the legislators. A new bill will have to be introduced now,��� said an urban development official. The official exuded confidence that the new bill would have a smooth passage during the winter session. ���We had reservations about the bill when it was introduced. It proposed a drastic rise in tax across various sections of Mumbai residents. Especially, the middle class people would have had to shell out quite a big amount towards property tax. But we have succeeded in making the bill much more acceptable now,��� said BJP legislator Raj Purohit.
It may be noted that reforms in Mumbai���s property tax system is expected under JNNURM which is funding a large number of Mumbai infrastructure projects.
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