Civic officials expressed the fear that it will have adverse effect on property tax revenues.
Mumbai: With the returns over Goods and Services Tax (GST) still uncertain, the Brihanmumbai Municipal Corporation (BMC) may be staring at heavy revenue losses if Shiv Sena’s plans of giving waiver and discount in property tax are implemented. The civic body is likely to suffer a huge loss of more than Rs 500 crore in property tax revenues due to these measures, said civic officials.
In a letter to mayor Vishwanath Mahadeshwar, Sena leader Yashwant Jadhav has demanded that houses with an area of up to 500 sq ft should be exempted completely from paying property tax for a period of 2015-16 to 2020. In addition to this, houses with an area ranging from 500 to 700 sq ft should be given 60 per cent concession in property tax for this period, he said.
As per civic data, there are 30 lakh property tax holders in the city, of which half of them have houses that are 500 sq ft in area, 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. Furthermore, we will also have to give refunds for the first two years – 2016 and 2017. It means there will a further loss, he added.
In its manifesto for BMC polls, which were held early this year, Shiv Sena had promised that it would not charge property tax on houses up to 500 square feet. Furthermore, discount will also be offered to houses from 500 to 700 sq ft, it had announced.
“We had given in writing in the manifesto that property tax would be waived off for 500 sq ft houses and discount will be offered to houses of 700 sq ft. We are trying to fulfil our promise,” said Mr Jadhav.
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.
What do the numbers say?
Property tax holders in the city : 30 lakh
Properties up to 500 sq ft : 15 lakh
Properties up to 500-700 sq ft : Two lakh
Expected loss : Rs 550 crore
BMC property tax target for 2017-18 : Rs 5400 crore