Tax on prime Mumbai land may double

Corporation proposal is soft on hike

Maharashtra's Congress and Nationalist Congress Party (NCP)-led Democratic Front (DF) government proposes to double property tax rates for the southern part of Mumbai "" areas like Marine Lines, Colaba, Malabar Hill "" from 5 paise a square foot to 10 paise, for the next five years.

Property prices in these areas are extremely high and are not reflected in the tax rates.

Property tax rates elsewhere in the suburbs range between Re 1 per sq ft and Rs 9 per sq ft.

The proposed increase in property tax, however, falls far short of what the state government had promised in writing to the Centre.

It had committed itself five months ago to rationalising property tax rates in the city to reflect the market value of real estate and reduce the disparity between tax rates for the suburbs and the posh areas of the city.

The relatively minor tax increase proposed follows the strong objections raised by BJP leaders in the state to much stiffer tax rate increases.

"Under the present system, a resident of the island part (greater Mumbai) pays a minuscule amount of property tax, against those living in far-off suburbs such as Bhandup or Dahisar. We want to rationalise the property tax structure, but at the same time restrict the hike to a maximum of twice the rate that is now being paid by the residents," said Sanjay Ubale, the state government's secretary for special projects.

The Brihanmumbai Municipal Corporation (BMC) had been directed to flesh out the proposal for property tax tariff rationalisation so that Mumbai's high-priced areas are charged rates that reflect their market value, while the suburban districts are given the benefit of lower tax rates.

The corporation earns Rs 1,200 crore from property tax. Approximately a fourth of this comes from the high-cost island city area; the rest comes from the city's middle class-inhabited suburbs.