Maharashtra Government has imposed capital value-based system to calculate property tax on buildings, lands, houses and establishments across the state. The new system has been put in effect since April 27. “The property tax would be calculated on capital value-based system for all the Municipal Corporations, Councils and local bodies,” an official from the Urban Development Department told.
The new system will be based on the actual property value. The figure will be mostly based on the stamp duty ready reckoner, which the government brings out every year, the official said.
The capital value-based system would be upgraded every five years but the tax levied would not be more than 40 per cent over the previous years, he said.
It would be liable for the owner of the property to pay the tax within three months, else fine would be imposed.
As of now, Mumbai follows the rateable value-based system, which was introduced in 1888 by the BMC Act. The property tax is calculated on the basis of the rent under the older system.
The proposal to switch over to the capital value system is based on a study conducted by the Tata Institute for Social Sciences (TISS) and the University of Mumbai.
TISS had estimated that the switch to the capital value-based system would improve the tax collection by up to 200 per cent.
The old buildings in the island city, where the rents are frozen due to the Rent Control Act, have to pay a pittance as property tax even though capital values in the island city are very high, the official said.
On the other hand, buildings in the suburbs, where the Rent Control Act does not cover most buildings, have to pay massive property taxes even though the capital value in the area may be a fraction of that in the city, he added.
Courtsey : Taxguru