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Property tax could cause exodus from Mumbai by 2020, warns taxation expert
May, 18th 2013

Individual property owners as well as housing societies in Mumbai are burdened by the multiple increase in property tax that is moreover being levied with retrospect effect.

Thousands of petitions have already been filed in the law courts against the BMC's new levy.

The Flat Owners Association recently held a seminar to discuss the impact of this increase in property tax on the common man.

Diwakar Raote, MLC, questioned the validity of using the ready reckoner to compute taxes. He said the RR is only a guideline used to determine market value for the payment of stamp duty. The BMC is the only civic body that has moved to the capital value-based system for levying property taxes, he added.

However, senior chartered accountant and taxation expert Vimal Punamiya said that the fact that tax calculation will now be based on the government's ready reckoner will reduce corruption. He said the BMC had tried to cushion the impact of the exorbitant increase for the first five years by capping the increase of property taxes to a maximum of 100% over the earlier rate. Also, it had not increased taxes for residential properties of less than 500 sq ft carpet area for five years.

Yet, Punamiya cautioned that a substantial number of properties in South Mumbai were tenanted properties. Here landlords will relay the increase to tenants who may face the danger of eviction if they do not assist the landlord in paying property tax. Punamiya said he feared an exodus from Mumbai by the year 2020 as property taxes will skyrocket. Residents who have lived in Mumbai for more than 25 years will be unable to afford to pay, he said.

Advocate Shilpa Mahabaleshwar Morje, secretary of the Flat Owners Association, said it was appalling that taxation had been made revenue neutral even for residential properties. She said there need to be separate categories for self-occupied properties and those that are sub-let or rented with maximum concessions to self-occupied properties. The concession due to the age of the building should consider the cost inflation index in favouring old properties. Morje said the civic authorities should give major concessions to properties housing orphans, destitute women and children.

Advocate Girish S Pikale, chairman of the association, suggested that like Goa, the Mumbai municipality should directly bill members or occupants of individual housing units so that they are responsible for tax dues, not the society or landlord. He said that he basis of tax should be carpet area instead of a vague built-up area, and reconciled with ready reckoner rates which are based on carpet area.

Pikale said tax from tenants should be levied directly by the municipality instead of making the landlord collect the dues.

The occasion saw the book release of 'A Practical Guide for Transfer of Flat to Nominee/ Heir' by advocate Shilpa Mahabaleshwar Morje at the hands of Diwakar Raote.

 
 
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