Maharashtra Govt Tables Amendment Bill To Restore BMC’s Property Tax Powers With Retrospective Effect

Mumbai: The Maharashtra government on Wednesday tabled a crucial amendment bill in the Maharashtra Legislative Assembly seeking to restore the Brihanmumbai Municipal Corporation’s powers to levy and collect property tax with retrospective effect, following adverse court rulings that had stalled revenue collection.

Amendment Tabled

The Bill, introduced by Minister of State for Urban Development Madhuri Misal, proposes amendments to the Mumbai Municipal Corporation Act to bring clarity and legal backing to provisions governing the fixation of capital value of properties.

The Municipal Corporation of Brihanmumbai (MCGM) has been levying property tax based on the capital value system since April 1, 2010. Under existing provisions, the Municipal Commissioner was empowered to frame rules for determining capital value, which led to the formulation of the Capital Value Rules in 2010 and later revisions in 2015. These rules were implemented with retrospective effect from 2010.

Capital Value System

However, the Bombay High Court in 2019, and later the Supreme Court of India in 2022, ruled that such rules could not be applied retrospectively, as the parent Act did not explicitly grant such powers to the Commissioner. The courts struck down key provisions, leading to a halt in assessment and recovery of property taxes.

Officials said the development resulted in significant revenue losses for the civic body, severely affecting its ability to deliver essential services such as healthcare, education, water supply, housing and transport. Property tax remains the primary source of income for the BMC.

Proposed Fix

To address the situation, the proposed amendments seek to explicitly empower the Commissioner to frame rules for determining capital value, including provisions for retrospective implementation. The Bill also proposes re-enactment of the Capital Value Rules, 2010, with effect from April 1, 2010, and restoration of provisions enabling levy and collection of property tax.

The government has argued that the amendments are necessary to remove the legal hurdles identified by the courts and to prevent further revenue losses, ensuring that the civic body can continue to discharge its constitutional responsibilities and maintain urban infrastructure in Mumbai.

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