Indian Express 27.07.2010
Property tax bills not yet sent, BMC stares at crisis
sharvaripatwa Tags : BMC property tax bills, mumbai Posted: Tue Jul 27 2010, 00:13 hrs
Mumbai: Unlesss it can despatch its property tax bills soon, the BMC could face a funds crunch, for property tax collections are down by as much as 68 per cent compared to this time last year — Rs 124.04 crore, after Rs 399 crore as on July 25, 2009.Monthly tax collections are also down by over 86 per cent this month, compared to collections last July, Rs 22 crore against Rs 166 crore.
“If the bills are not sent soon, a cash crunch is likely,” said R B Dhas, chief accountant.
Property tax bills usually despatched in April have not yet been sent, confirmed V D Pandere, assessor & collector.
The BMC had sent a proposal to the state Urban Development Department seeking permission to send bills based on the existing, rateable value-based system of assessment almost two months ago, but approval hasn’t yet come in. A shift to a new system based on capital value is expected to take a few months. “Meanwhile the aim is to fill the coffers to fund ongoing projects,” said an official.
“Once the new system is in place we will bill property tax owners for the difference between the old and new systems,” said Pandere. “In some cases people might have to pay more, while in some cases the BMC might have to refund money.”
“Usually there is an income flow that is used to meet the expenses that arise in the BMC,” said Dhas. “If any income flow is affected for a considerable time, then a cash crunch is obvious.”
The property tax department had made collections of Rs 2660 in 2009-2010, exceeding the target for that year.
The property value on which the new system is based will be calculated as per the stamp-duty ready reckoner rates that the government brings out every year. Older buildings will get a concession for depreciation.
The rateable value-based system followed now was introduced in 1888. Citizens are charged according to the rental values of their property. As a result, most properties in South Mumbai, where rents are low thanks to the Rent Control Act, end up paying smaller taxes compared to those in the suburbs.
The new system, which officials hope to implement by October, is expected to swell the BMC kitty by 25 per cent. The property tax collection target for 2010-2011 is Rs 2,800 crore.
