Shiv Sena's property tax waiver sop to cost BMC Rs 500 crore loss

Mumbai: In a bid to fulfil its poll promise, the Shiv Sena passed its proposal to offer complete waiver on property tax to houses up to 500 sq ft in the city. It has also decided to give a 60 per cent concession in property tax to houses from 500 sq ft to 700 sq ft.

The proposal for the waiver was passed in the civic general body meeting on Thursday.

In its manifesto for BMC polls, which were held earlier this year, Shiv Sena had promised that it would not charge property tax to houses up to 500 sq ft and the discount will also be offered to houses from 500 sq ft to 700 sq ft.

The demand for the waiver was made for a period of 2015-16 to 2020 by Sena group leader Yashwant Jadhav in a letter to mayor Vishwanath Mahadeshwar. “The proposal will now be sent to the state urban development department for approval,” said a senior civic official.

According to civic data, there are 30 lakh property tax holders in the city, of which half of them (15 lakh) posses an area of 500 sq ft, whereas nearly two lakh properties are up to 700 sq ft.

Civic officials expressed the fear that it will have adverse effect on property tax revenues. “Property tax of Rs 1,100 crore is collected every year from residential properties. If the suggestion of giving waiver and concession is implemented, we will have to face a loss of over Rs 500 crore. The BMC will suffer a loss of Rs 300 due to waiver to 500 sq ft houses and Rs 250 crore due to concession to 700 sq ft houses,” said a senior civic official.

Property tax is the second highest source of revenue for the BMC after octroi. This fiscal year, the civic body has set a target of Rs 5,400 crore from property tax collections.

Taxing Times

• Property tax holders in the city: 30 lakh
• Properties up to 500 sq ft: 15 lakh
• Properties up to 500-700 sq ft: 2 lakh
• Expected loss: Rs 550 crore
• BMC property tax target for 2017-18: Rs 5400 crore.