Mumbai: BMC gets green light to collect property tax from small houses

There are around 4.20 lakh property tax payers in the city, including 1.36 lakh who have homes measuring less than 500 sq ft. Pic/Atul Kamble

The municipal commissioner finally gave the approval to collect property tax from houses measuring less than 500 sq ft on Tuesday. While the ruling Shiv Sena had pushed for a waiver for small houses, the decision was taken by the administration, as there wasn't any amendment in the law at the state level for two years and due to the deteriorating financial condition of the civic body. mid-day was the first to report this on December 3, 2020 in 'It's final. BMC will now take property tax from everyone'.

Amendment not yet done

Waiving off property tax on small houses was on the Shiv Sena's manifesto for the civic election of 2017. The decision needs an amendment in the Property Tax Act, which has not yet been done. While the Brihanmumbai Municipal Corporation (BMC) didn't send property tax bills to small houses last year, they will be sent this year. This year the BMC delayed sending property tax bills for bigger houses also, due to demands of waiving this also from various groups. But in December the decision was taken. mid-day had reported that the corporation will collect the property tax from everyone but the bills for the small houses will be sent in the next phase, on December 10.

"Though the discussion of collecting tax from small houses was going on for a while at the department level, we got the official nod from the municipal commissioner on Tuesday. The bills will be sent within a fortnight," said Sangita Hasnale, assistant commissioner of the Assessment and Collection Department. The BMC started distributing property tax bills for bigger houses in January.

"As per a Government Resolution (GR) in 2019, only the general tax component in property tax can be waived off for houses measuring less than 500 square feet. So the bills will be issued by deducting the general tax component," said a BMC officer.

Largest source of income

Property tax is the second largest source of income for the BMC and it was able to collect only 10 per cent (R 738 crore) till the end of December. As per the estimates of the 2020-21 budget, the civic body should net R6,768 crore in property tax, which is one-fourth of its total income. There are around 4.20 lakh property tax payers in the city, including 1.36 lakh who have homes measuring less than 500 sq ft. The civic body is likely to collect around R350 crore revenue from small houses.

In March 2019, the then Bharatiya Janata Party (BJP) government had approved amending the Property Tax Act to effect the waiver. But the GR in 2019 only amended section 140 (C) of the Act, which caters to the general tax component, merely 10 per cent to 30 per cent of the total. The current government has not taken a decision on the matter yet.