New Property Tax rules all set to burn pockets

By Ubaid Parkar

The 72nd Legislative Assembly Bill does make a commendable effort for housing for the poor. The Bill was a result of the inconveniences of the “70 per cent families” who live in old building for a better part of two generations.

As per the report, it states that most of the middle class people in Mumbai live in a home that does not admeasure more than 500 sq. ft. This is a load of nonsense. I am from a middle class background with middle class acquaintances, all of whom which do not live in sprawling flats or bungalows and reside in the spreads of the suburbs. My flat, for instance, is roughly 630 sq. ft. And I am very worried that I may have to evict the house in another decade or so provided I do not win the State lottery for my long term sustainability.
The report has pigeonholed the middle class to 500 sq. ft., a class which was earlier decided by annual incomes will now be
decided by the size of the house they stay in. It further proposed that most of the old buildings need to be demolished and new buildings with flats of not more than 500 sq. ft each should replace them. This is to be done so as not to impose the dreadful Property Tax Bill on its residents.
Veera Desai Road in Andheri (W), for instance, is not as fancy as say Lokhandwala, a distance of twenty minutes away in a local rickshaw. But some of the prices in Veera Desai Road of residential flats have more than tripled in the last five years. This is owed to massive commercial complexes that have sprung up in the area from the far reaches of Indian Oil, the Star Bazaar Mall, to the Reliance Fresh franchise on Dattaji Salvi Road and malls galore in Veera Desai Road itself and Amboli as well. Or the construction of the Metro rail on JP Road. This has resulted in prices to rocket to infinity and beyond, might I add with no other amenities that the area enjoys, other than just a future of shopping sprees for expensive
drools you may never need.
The Bill then looks at a limit of flats for 500 sq. ft. as “middle class” whereas it was no fault of mine that I ended up with a flat, booked in 1982, hindered with red tape and acquired exactly two decades later. I considered myself lucky with those odds but now the luck seems to have run out as I occupy a flat in excess of 137 sq. ft. for me to be classified as middle class.
Progressive taxation is clearly an answer, along with the acquisitions and the ease of amenities available for a land or
a building but then again to enumerate it with other allied factors further complicates things, but we presume that we are paying taxes to have solutions found in the first place.
The 72nd Bill also incorporated that the tax rates will be maintained for a period of five years at a time and will be revised after this period concludes with certain rate caps on either spectrum of the taxable amount. It had proposed that the maximum cap for residential purposes not to exceed twice the amount from the previous year and thrice the amount for nonresidential structures; whereas the lower limit is restricted to 40% and should not drop below the mentioned. The caps are as per Section 140A.
Where do these numbers come from? Were they plucked off from the sky? A residential pocket may see its value close to its double but not double itself, because the Bill circumvents it be twice the value of the preceding year. Does it take into account inflationary pressure trends or the disinflation on the brink of deflation that the economy is currently facing?
Valuations, it needs to be reiterated are done on Market Values which in turn are governed by fabricated costs. It does not
take the many variables involved in owning a home in the city like as mentioned before civic amenities or the lack thereof,
slums in the vicinity, quality of roads, flooding so on and so forth. What it has done though that it has introduced the numerous variables into the commercial segment, the same commercial segments which have its impact on residential areas.
First and foremost, it does not shed light on the variances on valuation that it may involve in assimilating the true worth of the area. Commercial land may be taxed up to three times the value of the preceding year. These steep climbs will be the downfall of consumerism and the retail segment due to heavy repercussions as they will have very few takers. In these tough times, and it would not be the last, it would be difficult to find inventories to cover up the cost of these rising prices.
Although the Bill itself, in its intent speaks well but it is laced with millions of platonic vicissitudes that can collapse the economic capital of the country.
Reports say that the Bill will come into effect before 2010, possibly in July this year. If so, the brunt will be borne in 2014, the next valuation period, when the economy will be just fine then, assuming there is no deadly war India may be engaged in, and Property Taxes will hit the roof. The amendment to the Bombay Municipal Corporation Act, 1888 was pending in the council after it was approved by the joint select committee and thereafter the state assembly. This city needs to be run by technocrats and not MLAs who waste the taxpayer’s money for rare sessions where nothing is convened
The underlying statement of the Bill is that the incremental tax would be pushed on to tenants. In the words of Mr Diwakar Rawte, MLC, candidly expressed in his dissent in the Bill, “…after five years, when the capital value thereof will change, it will generate further burden of hike in the tax and at that time neither you nor your secretary will be there to accept the responsibility.”
But the law will prevail.” He added “…it is going to be impossible for the common Mumbaikar to reside in Mumbai in the future.”

The 72nd Legislative Assembly Bill does make a commendable effort for housing for the poor. The Bill was a result of the inconveniences of the “70 per cent families” who live in old building for a better part of two generations.

As per the report, it states that most of the middle class people in Mumbai live in a home that does not admeasure more than 500 sq. ft. This is a load of nonsense. I am from a middle class background with middle class acquaintances, all of whom which do not live in sprawling flats or bungalows and reside in the spreads of the suburbs. My flat, for instance, is roughly 630 sq. ft. And I am very worried that I may have to evict the house in another decade or so provided I do not win the State lottery for my long term sustainability.

The report has pigeonholed the middle class to 500 sq. ft., a class which was earlier decided by annual incomes will now be decided by the size of the house they stay in. It further proposed that most of the old buildings need to be demolished and new buildings with flats of not more than 500 sq. ft each should replace them. This is to be done so as not to impose the dreadful Property Tax Bill on its residents.

Veera Desai Road in Andheri (W), for instance, is not as fancy as say Lokhandwala, a distance of twenty minutes away in a local rickshaw. But some of the prices in Veera Desai Road of residential flats have more than tripled in the last five years. This is owed to massive commercial complexes that have sprung up in the area from the far reaches of Indian Oil, the Star Bazaar Mall, to the Reliance Fresh franchise on Dattaji Salvi Road and malls galore in Veera Desai Road itself and Amboli as well. Or the construction of the Metro rail on JP Road. This has resulted in prices to rocket to infinity and beyond, might I add with no other amenities that the area enjoys, other than just a future of shopping sprees for expensive drools you may never need.

The Bill then looks at a limit of flats for 500 sq. ft. as “middle class” whereas it was no fault of mine that I ended up with a flat, booked in 1982, hindered with red tape and acquired exactly two decades later. I considered myself lucky with those odds but now the luck seems to have run out as I occupy a flat in excess of 137 sq. ft. for me to be classified as middle class.

Progressive taxation is clearly an answer, along with the acquisitions and the ease of amenities available for a land or a building but then again to enumerate it with other allied factors further complicates things, but we presume that we are paying taxes to have solutions found in the first place.

The 72nd Bill also incorporated that the tax rates will be maintained for a period of five years at a time and will be revised after this period concludes with certain rate caps on either spectrum of the taxable amount. It had proposed that the maximum cap for residential purposes not to exceed twice the amount from the previous year and thrice the amount for nonresidential structures; whereas the lower limit is restricted to 40% and should not drop below the mentioned. The caps are as per Section 140A.

Where do these numbers come from? Were they plucked off from the sky? A residential pocket may see its value close to its double but not double itself, because the Bill circumvents it be twice the value of the preceding year. Does it take into account inflationary pressure trends or the disinflation on the brink of deflation that the economy is currently facing?

Valuations, it needs to be reiterated are done on Market Values which in turn are governed by fabricated costs. It does not take the many variables involved in owning a home in the city like as mentioned before civic amenities or the lack thereof, slums in the vicinity, quality of roads, flooding so on and so forth. What it has done though that it has introduced the numerous variables into the commercial segment, the same commercial segments which have its impact on residential areas.

First and foremost, it does not shed light on the variances on valuation that it may involve in assimilating the true worth of the area. Commercial land may be taxed up to three times the value of the preceding year. These steep climbs will be the downfall of consumerism and the retail segment due to heavy repercussions as they will have very few takers. In these tough times, and it would not be the last, it would be difficult to find inventories to cover up the cost of these rising prices.

Although the Bill itself, in its intent speaks well but it is laced with millions of platonic vicissitudes that can collapse the economic capital of the country.

Reports say that the Bill will come into effect before 2010, possibly in July this year. If so, the brunt will be borne in 2014, the next valuation period, when the economy will be just fine then, assuming there is no deadly war India may be engaged in, and Property Taxes will hit the roof. The amendment to the Bombay Municipal Corporation Act, 1888 was pending in the council after it was approved by the joint select committee and thereafter the state assembly. This city needs to be run by technocrats and not MLAs who waste the taxpayer’s money for rare sessions where nothing is convened

The underlying statement of the Bill is that the incremental tax would be pushed on to tenants. In the words of Mr Diwakar Rawte, MLC, candidly expressed in his dissent in the Bill, “…after five years, when the capital value thereof will change, it will generate further burden of hike in the tax and at that time neither you nor your secretary will be there to accept the responsibility.”

But the law will prevail.” He added “…it is going to be impossible for the common Mumbaikar to reside in Mumbai in the future.”







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