Maharashtra property tax Bill referred to panel

South Mumbai residents can heave a sigh of relief as the state government, bowing to the demands of MLAs cutting across party lines, has agreed to refer the property tax amendment Bill to the joint select committee of both the Houses.

This was announced by state Urban Development Minister Rajesh Tope in the Assembly last week. As municipal corporation elections are scheduled to be held early next year in the state, no political party wants to take the onus for the Bill which will increase the tax burden on the residents of old cities.

Under the current rateable value system, tax is calculated on the basis of the rent a property will attract in the year when it was built. Since rents in the old parts of the city on old constructions were freezed at 1948 levels, there was no revision of the taxes on these structures.

As the rent control Act is not applicable on new constructions in the suburbs and old part of the city, the new properties attract disproportionately higher property tax. Under the new system, it is proposed that tax will be levied at the market value of the property.

This Bill is aimed at authorising the municipal corporations to shift to capital value system from the present ratable value system of the property tax, and removing anomalies in the tax structure and moving towards more progressive tax regime.

However, to protect the interest of those living in the old 'chawls' of south and south central Mumbai and similar localities in other parts of the city, a provision of not increasing the property tax by more than 2 times of present tax for residential properties and 3 times for commercial properties has been made.

Similarly, to ensure that the municipal corporation's revenues are not affected drastically, it has been proposed in the Bill that the burden of tax on properties in suburbs would not be reduced beyond 50 per cent of the present tax.