The Latest Municipal Policy On Property Taxes

The Latest Municipal Policy On Property Taxes
By CA, Vimal Punmiya


1. New System of Property Taxes will be applicable with effect from 01.04.2010. in the present system, the property tax is based on Rateable Value fixed at the time when the building receives its occupation
 certificate and the same does not changes till the building is redeveloped and/or is given on Rent. But however, the percent of Property Tax goes up and as a result the rate of Property Taxes varies from 58% to 315%.

2. There is different rates chargeable to Non-Agricultural Land, Building under construction and Building ready for occupation (such as Flats, Office, industrial Galas, Godowns, shops, etc.) depending on the market value of property as per Ready Reckoner of Stamp Duty published by the Government of Maharashtra.

3. Once the Property Tax is fixed for a property, the same would be applicable for the next 5 years from the date of application.

4. If the Property tax as per the new system is much higher than the Property tax as per the old system, then the Society or the owner would have the option to write to the Municipal Corporation. The same cannot
 be more than double in the case of the Residential Property and three times in the case of a commercial property. The increase in the Property Tax after 5 years from the date of application cannot be more than 40% for the next 5 yrs. The same would not be applicable in the case of New Building.

5. The same rate of property tax would be applicable whether the property is self-occupied or given to others on the basis of Tenancy, leave and license, lease, caretaker, Business centre, etc in the present system. The same is approved by the Assembly and will be incorporated in the New System. The Officers of BMC have so much of powers that in the case of a let-out property, the Property tax can vary from 35% to 60%. In Pune, Kolkatta, Delhi, the Property tax is double of the normal property tax if the property is given on Tenancy, leave and license, etc.

6. Concessional rates will be applicable to Charitable Organizations such as School, Hospitals, Temples, etc.). In the case Government Offices for Central as well as State, Foreign Embassies, etc no property tax.

7. the property tax will not be on concessional basis in the case of a new building. However, the old building would enjoy a rebate from 5% to 75% depending on the age of the Building. But the after rebate value
 cannot be less than the value of the land plus the construction cost.

8. The New system of property tax is transparent and even the property owner can calculate the property tax payable by referring to the Stamp Duty Ready Reckoner. Hence, there would be less corruption.

9. As per the New System, the rates of property tax would be reduced in the Suburbs and increased in South Mumbai depending on the age of the building, floor, type of construction, etc payable on the Market Value of the property calculated as per Stamp Duty Ready Reckoner.

10. If the area of the Residential property is less than 500 sq. ft. (carpet area) then there would be no increase in the Property tax payable. Hence, the New System of property tax would not affect 70% of the
 Mumbaikars for atleast 5 yrs from the date of application.

11. If the property is lying vacant (i.e. if it is not in use) then the property owner can apply to the BMC and the property tax will be 40% for the normal property tax payable.

12. Further, the Property tax would be payable on the Built-up area of the property.

13. There are chances of error in Data collected by MCGM about the age of building, user type(residential, shop, office, etc.), carpet and built-up area of the premises, etc. in this event, society or property owner can
 file the complaint /objection with MCGM in prescribed format.

14. The complaint has to be filled with respective Municipal Ward office, with the assessment department. The complaint has to be filed within 21 Days of receipt of the property tax Bill. If you file complaint after 21
 days, please file the same with request for condonation of delay.

15. Format for complaint is already sent by MCGM along with the new property tax Bills. Pro-forma is attached herewith.

For more details please contact on Helpline 1278 / 022 23670624 or mail to : 

Click Here for more details

Click Here for sample complaint format
Courtesy : J.B.Patel (Jeby) Mobile:9820538570


Nagesh Kini, Moneylife Foundation



3 thoughts on “The Latest Municipal Policy On Property Taxes

  1. I am the member of society
    I want it to give on leave n licence basis i.e.on rent
    What will be tax implication in regards to property tax n income tax

  2. Congratulations , BJP ! ( – in this case , Shri B J Pawar )

    Hindustan Times ( 15 Aug 2016 ) carries a news report , titled :
    ” Housing Societies that go green , to get rebate on property tax ”

    The report is about BMC ( Municipal Corporation of Greater Mumbai ) announcing a discount ( in the property tax ), to bring down the load on over-burdened landfills
    Mr B J Pawar ( Deputy Municipal Commissioner ) is quoted as :
    ” The rebate will depend on how the Societies have reduced the three-step work of the Civic body i.e. collection , transportation and disposal of waste ”

    Under the Scheme , if a Society segregates waste into wet and dry , processes it through composting or any other method , has reduced its energy consumption by using solar panels , uses grey water and has in turn reduced its consumption of potable water , will get the discount ( which , according to a TV Channel news last evening , would range from 10 % to a max of 20 % )

    India’s policy makers have started to listen to – and implement suggestions given by ordinary citizens !
    Thank you , Shri Pawar !

    PROOF ?
    My following blog / email sent to all concerned ( Central / State Ministers / BMC Officers etc ) :
    Wednesday, 27 April 2016

    Incentivize Housing Societies

    Disposal of garbage ( wet and dry ), is a big problem for all Municipalities

    In Mumbai , it is a daily 8,000 ton problem

    Despite a large fleet of garbage collection trucks and thousands of municipal employees ( including employees of contractors ), streets remain littered and garbage dumps keep overflowing ( when not burning ! )

    All kinds of solutions have been attempted in the past to solve this problem, without much success

    This is because current perception of the garbage generating households ( and of the office bearers of the housing societies ) , is :

    * Garbage collection / disposal is Municipality’s responsibility

    This problem will persist till we succeed in changing this perception to :

    * Garbage disposal is our responsibility ”

    This change of attitude can be brought about by ” Incentivizing ” the members of the Housing Societies


    * The society where I live ( Marol / Mumbai ) has 200 Members ( flats )

    * Each member pays monthly Municipal Tax of ( approx ) , Rs 600

    * That translates to Rs 1.2 lakh per month ( Rs 14.4 lakh / year )

    * In 5 years , Society pays to Municipality, Rs 72 lakhs

    * Govt / Municipality to make it compulsory for each big society ( size to be
    decided ), to install on its premises :

    # Methane gas generating plant or Compost Fertilizer plant

    ( to take care of wet / organic garbage )

    # Water recycling plant ( to filter and reuse water from shower / wash
    basin / kitchen sink for toilet flushing purpose )

    # A Compacting Press for dry waste ( paper / bags / cartons etc )

    * Towards installation of such plants , Municipality to give a discount of
    25 % to the Society in monthly taxes , for a period of 5 years

    That is a rebate of Rs 150 / month / flat for 5 years

    This would work out to a saving of Rs 18 lakh ( 25 % of Rs 72 lakh )

    * This amount should be sufficient for the Society to invest in these plants
    and for paying wages for persons needed to look after their operations

    I believe such a positive incentive will motivate most of the Societies to undertake to install such facilities

    As a negative incentive , Govt / Municipality should levy additional surcharge of 25 % on the monthly taxes ( ie raise to Rs 750 / month in our case ) to those societies which fail to implement this scheme within ONE YEAR of notification

    It is high time citizens are involved and motivated ( through negative as well as positive incentives ) in keeping their cities clean and its environment pleasant

    I am sure such an experiment will find a far better response from the public as compared to the ODD-EVEN scheme of Delhi ( which too will succeed when Delhi-ites find plenty of Public Transport )

    Incidentally , Shri Arvind Kejriwal and his team should study ( without sending a delegation abroad ! ),

    * ” Share – a – Bike ” taxi scheme ( BIXI )

    which has successfully solved the traffic congestion problem in Montreal ( Canada )


    17 Aug 2016 / blogs

  3. I am planning to purchase a resale flat in a building without OC. the tenant has paid the property tax to cooperative society, but the society has not paid it further to bmc. what can be future implications?

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