Mumbai: BMC To Levy Tax On Commercial Structures In Slums To Offset Property Tax Revenue Decline

Mumbai: BMC To Levy Tax On Commercial Structures In Slums To Offset Property Tax Revenue Decline

The BMC has seen a decline in property tax collection due to exemption for residential properties up to 500 sq.ft. and no hike in tax in the past five years. In addition to this, the legal complexities of new methods of tax calculation badly affected the revenue collection in 2023-24.

SHEFALI PARAB-PANDITUpdated: Tuesday, May 14, 2024, 10:48 PM IST
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Mumbai: BMC To Levy Tax On Commercial Structures In Slums To Offset Property Tax Revenue Decline | Representative Image

Mumbai: Property tax, the second-highest revenue source of the BMC, suffered a heavy blow last year. So, in order to open a new source of income, the civic body is mulling again on levying a tax on commercial structures in slums. Accordingly, the civic authorities have instructed the 24 administrative wards to carry out a survey of commercial properties in slums in their respective wards.

The BMC has seen a decline in property tax collection due to exemption for residential properties up to 500 sq.ft. and no hike in tax in the past five years. In addition to this, the legal complexities of new methods of tax calculation badly affected the revenue collection in 2023-24.

So, the initial target of property tax was revised from Rs. 6,000 crores to Rs 4,500 crore and the bills were sent on February 27 this year. However, by tracing big defaulters, the civic body was able to collect Rs 3,960 crores by May 13. The BMC has extended the deadline to pay property tax till May 25.

The revenue collected through property tax contributes to making provision for infrastructure projects in the city. So, to cover the loss, the BMC is mulling over developing a new source of income through property tax. The cash-strapped civic body will impose a tax based on the area of a property, as per the civic sources. Last time the BMC decided to collect tax from slum dwellers was in 2016-2017.

In 2016, the BMC decided to collect from Rs 2,400 to Rs 18,000 as tax, annually, based on the area and type of huts. The then BMC commisioner Ajoy Mehta also proposed in the Budget to levy tax on slum properties. However, the civic body did not go through with either of its decisions.

"Currently, no tax is collected in the slum. But we are planning to impose tax on commercial properties in slum areas. The civic officials will visit the properties in their respective areas and collect the information, after which we will put a proposal for levying taxes on such properties," said a senior civic official. Till 2006-07, BMC would collect a service charge of Rs100 from residential slum structures and Rs250 from commercial per year. 

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