Mumbai: Big Relief For Mumbaikars, Maharashtra Cabinet Decides Not To Increase Property Tax

Mumbai: Chief Minister Eknath Shinde has taken the decision not to increase property tax in Mumbai. This is the fourth time that the state cabinet has refused to increase property tax in Mumbai. The demand to increase property tax has been denied since year 2020. The 2024 is the election year as Lok Sabha, state assembly elections are going to be conducted this year. The government wants to lure the voters. Therefore, no decision was taken to increase the property tax.

Chief Minister Eknath Shinde had presided over the Cabinet meeting on Monday. The decision will give relief to common Mumbaikar but it would be a loss of  Rs 736 crores of BMC, which is struggling to meet the expense for the projects. On the property tax context, demands from taxpayers and local representatives were received to implement the Supreme Court's final judgement on capital-based taxation and get final payments.

Accordingly revised payments regarding property tax will have to be made after making amendment in the law. Accordingly, taking into account the pending amendment in the Mumbai Municipal Corporation Act, 1888, it has been decided to give relief to the tax payers of Mumbai without revising the capital value in 2023-24. An ordinance will be issued in this regard.

BMC Revenue Dips

Property tax is the second largest revenue source of BMC. However, the BMC has seen a decline in revenue collection in the last two years. The exemption of property tax for residential properties up to 500 sq ft resulted in a loss of Rs 462 crore. Also, the revision in tax that was due in 2020-21 was deferred due to the pandemic and continued till 2023, which decreased revenue by Rs.1,080 crores.

Further, the civic body had a major setback after the Supreme Court, in March 2023, rejected a review petition filed by the BMC challenging a high court order in 2019 that set aside certain rules framed by the BMC for retrospective tax assessment. Due to legal complexities in BMC’s retrospective tax assessment, the civic body is yet to send the bills to the taxpayers for the current financial year 2023-24.

Challenge For BMC

During the budget day, Municipal commissioner and Administrator Dr. Iqbal Singh Chahal had said, "The decision not to hike the property tax for 2023-24 will be taken in the state cabinet meeting on Monday. After that, we can start sending bills for the current financial year from next week." With just two months left for the end of financial year 2023-24, the BMC will have to collect Rs 3,895 crores by March 31, to meet the current financial year's target.